F Chapter 12

Question 1

Consideration

Answer 1

The value given in return for a promise. It is the fuel that makes a K run. Mutual exchange of legally sufficient and bargained for, a risk + award and reward and benefit.

Consideration is something for something…it is the why you did this, promised that, or did not do that other thing.

Question 2

What are two types of consideration

Answer 2

Regular

Forbearance

Question 3

Regular Consideration

Answer 3

Promise to do something on has no prior legal duty or obligation to do.

Question 4

Forbearance

Answer 4

Promise to not do something one has a legal right or ability to do.

Question 5

What are two nonvalid consideration

Answer 5

Pre-existing Duty

Past Consideration

Question 6

Pre-existing Duty

Answer 6

There is no consideration where one is merely doing something one is already obligated to do.

This does not include “unforeseen difficulties” cases or where a new contract is created to override an older one.

Question 7

Past Consideration

Answer 7

There is no consideration where one is making a promise in return for actions or events that have already taken place ( often for free).

Question 8

Illusory Promise

Answer 8

A false promise such that there is no risk or obligation on the part of the one promising and therefore there is no consideration. Ex: “I promise to pay you if I feel that I should.”

Question 9

Accord and Satisfaction

Answer 9

A mutual agreement to exchange lesser performance than that originally agreed upon. For an accord and satisfaction to happen, there must exist an un-liquidated ( disputed) debt. You cannot have an accord and satisfaction where the debt is not in dispute and is clear ( liquidated).

Question 10

Check Cases

Answer 10

If A cashes or deposits the check without writing “under protest” next to his signature in the back of the check ( endorsement) A will cancel any remaining debt and B will be clear.
By writing “under protest” A only preserves his chance to seek the rest…he may still lose his effort, but at least he will have his day in court. Without that writing, he will not even be allowed in the door.`

Question 11

Perfect Consideration Promise

Answer 11

Both sides get something and give something up. The perfect example would be A owes B $ 500 due on Dec 1, 2015 but both agree that if A pays B $ 300 today B will forgive the rest. A gives up time but saves $ 200 and B gives up $ but gets payment now.

Question 12

Release

Answer 12

An agreement whereby one party gives up his rights to pursue a legal claim against another party. Need to be in good faith, written, and accompanied by consideration. Ex: A agrees not to sue B in exchange for $ 1,000.

Question 13

Covenant not to sue

Answer 13

An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim. Ex: I will not sue you if you paint my house.

Question 14

Promissory Estoppel

Answer 14

= When A makes a clear promise on which B reasonably relies to his detriment, A may be bound to his promise, or at least may have to make some sort of restitution if he does not honor that promise. NY only tends to hold this in cases of charities and agreements in consideration of marriage.

Question 15

Contractual Capacity

Answer 15

The ability to enter a valid, binding agreement. Usual examples are age, mental capacity, or intoxication cases.

Question 16

Disaffirmance

Answer 16

A enters K before 18 and wants out any time before 6 months to a year after becoming 18
If A wants out, this is called disaffirmance

Question 17

Emancipation

Answer 17

Child treated as a legal adult if

His parents or guardian give up legal control ( relinquish)

He is engaged in business as an adult or

He successfully petitions a court to divest his parents or guardian of legal control

Question 18

What happens when a minor lies about their age

Answer 18

Some states still allow him to get out of the contract

Some states will not allow him to get out because he lied about his age and

Some states will allow him to get out but will subject him to tort liability for his lie

Question 19

What are Necessaries / necessities

Answer 19

That which the minor needs to maintain his level and standard of life, such as medical care, housing, health care, food, education ( up to a certain level )etc. Minors cannot disaffirm such things but are only liable for the reasonable value of them or the agreed price, whichever is lower.

Question 20

Contracts contrary to Statute

Answer 20

Criminal contracts 
Usury 
Unlicensed 
Gambling 
Usury

Question 21

Contracts in Restraint to Trade

Answer 21

Contracts that tend to reduce competition for the provision of goods or services in a market (e.g., covenants not to compete).

Question 22

Restrictive Covenants in the Sale of a Business

Answer 22

Many agreements for the sale of an ongoing business require the seller not to open a competing business within a specified area including the business being sold. To be enforceable, the geographic restriction must be reasonable, and must be effective only for a reasonable period of time after the sale is completed.

Question 23

Restrictive Covenants in Employment Contracts

Answer 23

Many employment agreements, likewise, require the employee to refrain from working for a competitor or starting a new business in competition with the employer for a reasonable period of time, and within a reasonably defined geographic area, after the employment relationship ends.

Question 24

When is a restrictive covenant permitted

Answer 24

ancillary to an otherwise enforceable contract. If it is not ancillary to an otherwise enforceable contract, or if the terms of the covenant are too restrictive, the covenant will be void.

Question 25

Name 4 contracts contrary to public opinion

Answer 25

unconscionable Contracts
Procedural Unconscionability
Substantive Unconscionability
Exculpatory Clauses

Question 26

Unconscionable Contracts

Answer 26

Contracts that contain terms that unfairly burden one party and unfairly benefit the other.

Question 27

Procedural Unconscionability

Answer 27

Arises when one party to the contract lacks or is deprived of any meaningful choice regarding the terms of the contract due to inconspicuous print, unintelligible language, lack of opportunity to read the contract before signing, or lack of bargaining power. Unfair process

Question 28

Substantive Unconscionability

Answer 28

Arises when the contract contains terms that deprive one party of the benefit of its bargain or of any meaningful remedy in the event of breach by the other party. Unfair content

Question 29

Exculpatory Clauses

Answer 29

A contractual provision releasing a party from liability, regardless of fault. Usually not allowed in cases of efforts to avoid criminal or tort liability and closely viewed in cases of negligence.

a venue may print an exculpatory clause on tickets it sells for a concert, indicating that it is not responsible for personal injury caused by employees or others during the show.

Question 30

Now name 4 other Contracts contrary to public opinion

Answer 30

(1)  discriminate based on race, color, national origin, religion, gender, age, or disability;
(2)  commit a tort;
(3)  interfere with public service; and (4) delay, prevent, or obstruct legal process.

Question 31

EFFECT OF ILLEGALITY

Answer 31

A contract that is contrary to statute or to public policy is, generally, void; and, therefore, unenforceable. In most cases, both parties to a void contract are considered to be equally at fault (in pari delicto), and therefore cannot enforce the contract against the other party.

Question 32

Name 5 exceptions to Effect of illegality

Answer 32

Justifiable Ignorance
Protected Classes 
Withdrawing from an Illegal Agreement
Severability/Divisibility
fraud, duress, or undue influence

Question 33

Justifiable Ignorance

Answer 33

When one of the parties to an illegal contract has no knowledge or any reason to know that the contract is illegal, that party will be entitled to be restored to its pre-contractual situation.

A woman agrees to marry a man not knowing that he is already married; bigamy is illegal, the marriage is void, and she may sue him for damages

Question 34

Protected Classes

Answer 34

When a statute protects a class of people, a member of that class may enforce an otherwise illegal contract, even though the other party cannot.

An airline pilot, forbidden by federal law from working overtime, nevertheless does so; she would be entitled to payment for the overtime worked

Question 35

Withdrawing from an Illegal Agreement

Answer 35

If a party withdraws from a partial agreement before any illegality occurs, she may recover its value to her.

Ralph hires Jacob for $5,000 to arrange a bribe of a juror. Ralph has a change of heart; he can get his money from Jacob.

Question 36

fraud, duress, or undue influence

Answer 36

A party induced to enter an illegal contract by fraud, duress, or undue influence may either enforce the contract or recover its value to her.

Question 37

Severability/Divisibility

Answer 37

If the contract can be divided into legal and illegal parts, a court may enforce the legal parts but not the illegal ones.

A six-page employment contract contains two paragraphs of an illegal noncompete agreement. The illegal part is thrown out, but the legal parts are enforceable.