Contracts III--Consideration Flashcards
What is Consideration?
The majority of agreements that qualify as legally enforceable contracts contain a bargainedfor change in legal position between the parties, i.e., valuable consideration.
While substitute doctrines may permit enforcement of an agreement, only the presence of valuable consideration on both sides of the bargain will make an executory bilateral contract fully enforceable from the moment of formation. Simply stated, consideration is the price for enforceability in the courts.
Contracts III–Consideration
Contracts> III Consideration
x,x
What two elements are necessary to constitute consideration?
(1) there must be a bargainedfor exchange between the parties; and
(2) that which is bargained for must be considered of legal value or, as it is traditionally stated, it must constitute a benefit to the promisor or a detriment to the promisee. At the present time, the detriment element is emphasized in determining whether an exchange contains legal value
Contracts III–Consideration
Contracts> III Consideration (B)
x,x
What is a bargained for exchnage?
This element of consideration requires that the promise induce the detriment and the detriment induce the promise.
Unless both of these elements are present, the ‘bargained-for exchange’ element of consideration is not present. If either of the parties intended to make a gift, he was not bargaining for consideration, and this requirement will not be met
Contracts III–Consideration
Contracts> III Consideration (B)(1)
x,x
What is the general rule about
‘past’ or ‘moral’ consideration?
If something was already given or performed before the promise was made, it will not satisfy the ‘bargain’ requirement. The Courts reason that it was not given in exchange for the promise when made.
Contracts III–Consideration
Contracts > Consideration > Elements of
Consideration > ‘Past’ or ‘Moral Consideration >
-General Rule Not Sufficient Consideration
(3.B.1.c.1)
x,x
What is the debt barred by a
technical defense?
If a past obligation would be enforceable except for the fact that a technical defense to enforcement stands in the way (e.g. statute of limitations) the courts will enforce a new promise if it is in writing or has been partially performed. However the court will enforce the contract only to the extent of the new promise.
Contracts III–Consideration
Contracts > Consideration > Elements of
Consideration > ‘Past’ or ‘Moral Consideration >
Exceptions > Debt Barred by a Technical Defense
(3.B.1.c.2.a)
x,x
When is an act or forbearance by
the Promisee enough to be
considered consideration?
The test is whether the act or forbearance by the promisee would be of any benefit to the promisor. In other words, if the promisor’s motive was to induce detriment, it will be treated as consideration.
Contracts III--Consideration Contracts > Consideration > Elements of Consideration > Bargained for Exchange > Act or Forbearance by Promisee Must Be of Benefit to Promisor (3.B.1.a)
x,x
Is economic benefit required ,for
an act of forbearance by the
Promisee, to be considered
sufficient consideration?
The benefit to the promisor need not have economic value.
Contracts III–Consideration
Contracts > Consideration > Elements of
Consideration > Bargained for Exchange >
Economic Benefit Not Required (3.B.1.b)
x,x
What are the elements of consideration?
There must be a bargained-for-exchange between the parties and legal value.
Contracts III–Consideration
Contracts>Legal Value (III.B.2)
x,x
What is ‘adequacy of consideration’?
A sales is a contract in which title to GOODS passes from the sell to a buyer at a price [UCC 2-106(1)]
Contracts III–Consideration
Contracts>Adequacy of Consideration (III.B.2.a)
x,x
Is token consideration sufficient?
No, if the consideration is only token, it will usually not be legally sufficient. This is a gift rather than bargained-for consideration.
Contracts III–Consideration
Contracts>Adequacy of Consideration (III.B.2.a)
x,x
What is ‘sham consideration’?
Parties to a written agreement often recite that it was made in consideration of $1 or some other insignificant sum. Frequently, this recited sum was not in fact paid and, indeed, it was never intended to be paid. Most courts hold that other evidence may be introduced to show that the consideration was not paid and no other consideration was given.
Contracts III–Consideration
Contracts>Adequacy of Consideration (III.B.2.a)
x,x
What is ‘possibility of value’ in terms of consideration?
Where there is a possibility of value in the bargained-for act, adequacy of consideration will be found even though value never comes into existence.
Contracts III–Consideration
Contracts>Adequacy of Consideration (III.B.2.a)
x,x
Between the promisee and promisor, who receives legal detriment and who receives legal benefit?
There is legal detriment to Promisee and legal benefit to promisor
Contracts III–Consideration
Contracts>Consideration (III.B2b)
x,x
When does the promisee endure ‘legal detriment?’
Legal detriment will result if the promisee does something he is under no legal obligation to do or refrains from doing something that he has a legal right to do.
Contracts III–Consideration
Contracts>Consideration (III.B2b1)
x,x
When does the promisor receive ‘legal benefit?’
A legal beneift is a forbearance of performance of an act by the promisee which the promisor was not legally entitled to expect or demand, but which confers a benefit to the promisor
Contracts III–Consideration
Contracts>Consideration (III.B2b2)
x,x
