Contract Law

Question 1

What are the two requirements for consideration to exist?

Answer 1

1. There must be a bargained-for exchange of promises or performance
2. The promised or provided performance must have legal value

Question 2

What constitutes legal value in the context of a settlement agreement?

Answer 2

A party’s promise not to bring suit to enforce a claim or assert a defense has legal value only if:
* The claim or defense is valid
* The claim or defense is subject to a good-faith dispute
* The party honestly believes that the claim or defense may be valid

Question 3

True or False: A promise not to bring suit has legal value regardless of the validity of the claim.

Answer 3

False

Question 4

Fill in the blank: A party’s promise not to bring suit has legal value only if the claim or defense is _______.

Answer 4

[valid or subject to a good-faith dispute]

Question 5

What does ‘bargained-for exchange’ refer to in legal terms?

Answer 5

An agreement where parties exchange promises or performances