Exam 2- Ch 11 Flashcards
The VALUE given in return for a PROMISE or performance in a contractual agreement. must have “legally sufficient value” and a “bargained for exchange”
consideration
1-a promise to do something that one has no prior legal duty to do
2-performance of an action that one is otherwise not obligated to undertake
3-refraining from an action that one has a legal right
Promise
Performance, or
Forbearance
Legally Sufficient Value
the act of refraining from an action that one has a legal right to undertake
Forebearance
remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made. Unmaking of a contract that is executory
Rescission
promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. Intended to prevent extortion and the so called hold up game.
Preexisting Duty
promises made in return for actions that have already taken place are unenforceable. No. consideration. Element of bargained for exchange is missing.
Past Consideration
contract express uncertainty of performance. the promisor has not definitely promised to do anything. it is illusory- without consideration and unenforceable. It may or may not happen and depends on something else to happen.
Illusory Promise
-must provide basis for the bargain
-something of legal value (promise, or performance) must be exchanged between parties
Promise must be legally detrimental to promisee or legally beneficial to promisor. Not illegal; exchange something of value
Bargained for exchange (negotiation)
- courts will not consider adequacy of consideration
- Law Does NOT protect a person from entering into an unwise contract “Buyer Beware”
Adequacy of Consideration
-lacks consideration
promise to do what one already has a legal duty to do does not constitute legally sufficient consideration
Pre existing Duty
debtor offers to pay a lesser amount than the creditor purports to be owed
Accord=agreement
Satisfaction= performance
Accord and Satisfaction
amount has been ascertained, fixed, agreed on, or exactly determined
-Not discharged
liquidated debt
parties give up legal right to contest the amount in dispute. If settle on a lesser ant they still have right to go after you .
amount of debt is NOT settled
unliquidated debt
bars any further recovery beyond the terms in the release. one party forfeits the right to pursue a legal claim against the other party.
Release
agreement to substitute contractual obligation for some other type of legal action based on a valid claim
Covenant Not to Sue
plaintiff must show he reasonably and substantially relied on promise of another can obtain recovery
-promise made, relied on, but was uneforceable
Promissory Estoppel
- must be definite promise
- promisee must justifiably rely on the promise
- reliance is substantial
- justice will be served by enforcing promise
Promissory Estoppel Requirements
Barred, impeded, or precluded
Estopped
Courts apply estoppel to hardship or inequitable cases
Application of Promissory Estoppel
legal ability to enter into a contractual relationship
Contractual Capacity
-at 18 yrs a person is emancipated and has the legal capacity to enter into any contract
Contractual Capacity- Minors
in regard to minors, the act of being freed from parental control
Emancipation
contract can be disaffirmed (set aside) at any time during minority, or for reasonable period after minor is emancipated
- can be EXPRESSED or IMPLIED
Disaffirmance- Minor
- majority rule; minor need only return the goods subject to the contract, provided the goods are in the minor’s possession or control
Minor’s Obligation on Disaffirmance
Majority Rule
