Formation - Consideration & Promises w/out Consideration

Question 1

Consideration - defintion

Answer 1

bargained for legal detriment to the promisee

Can be return promises to do or refrain from doing something OR
performance of or refraining from doing some act

Question 2

bargained for legal detriment

Answer 2

1. bargained for
2. in exchange for the promise
3. promise must induce the detriment, AND
4. the detriment MUST induce the promise

Question 3

Gift v. Consideration Test

Answer 3

Whether the offeree could reasonably believe the intent of the offeror was to induce the action

Yes = there is consideration and promise IS enforceable
No =

Question 4

Promissory Estoppel - Definition

Answer 4

A promise is binding if:

1. Promisor should reasonably expect it to induce action on the part of the promisee or a third person
2. Promise does induce such action, and
3. Injustice only avoided by enforcement of promise

When promisor/donor

1. Knows that the promise to make a gift will
2. Induce substantial reliance by promisee AND
3. Failure to enforce it would cause substantial injustice

Question 5

What is adequate consideration?

Answer 5

Subjective

The benefit to the promisor need NOT have economic value, IF promisor wants it, giving it will constitute adequate consideration

Question 6

Preexisting Duty Rule - Definition (CL)

Answer 6

CL

Preexisting duty does not quality as consideration UNLESS

1. promisor gives something in addition to what is owed; or
2. varies preexisting duty in some way

Question 7

Preexisting Duty Rule - Exception

Answer 7

Party’s promise to a third party to perform an act the party is contractually obligated to perform for another IS sufficient consideration

EXAMPLE???

Question 8

Past Consideration - modern trend

Answer 8

Trend toward enforcing past promises under the material benefit rule

Question 9

Modification of Contract - CL

Answer 9

MUST be supported by consideration

Question 10

When are agreements to modify contracts enforceable? - CL

Answer 10

Agreements to modify ARE enforceable IF

1. Rescission of existing K and entering into new K?????
2. Unanticipated difficulties arise and modification is fair and equitable OR
3. New obligations arise on both sides

Question 11

Modification of Contract - UCC

Answer 11

Requires ONLY good faith (no consideration necessary)

Question 12

?????Agreement to Modify Contract - UCC

Answer 12

Requires only good faith???? - no consideration necessary

Question 13

Accord

Answer 13

One party agrees to accept a different performance from the other party to satisfy the existing duty

Question 14

Satisfaction

Answer 14

Performance of the accord agreement will discharge both the original K and the accord K

Original K NOT discharged until satisfaction is complete

Question 15

Illusory Promise

Answer 15

Not legally binding because it is

1. Vague OR
2. Promisor can choose whether or not to honor it

Question 16

?????

Can voidable promises constitute consideration?

Answer 16

Yes

Why????

Question 17

????

Can unenforceable promises still constitute consideration?

Answer 17

Yes

Why????

Question 18

Requirements Contracts - definition

Answer 18

Buyer agrees to buy all that he requires from seller

Question 19

What is the consideration in a requirements contract?

Answer 19

There is consideration because the promisor suffers a legal detriment - buying from someone else?

Quantities may NOT be unreasonably disproportionate to estimates

Question 20

Output Contract - definition

Answer 20

Seller agrees to sell all that she manufactures

Quantities may NOT be unreasonably disproportionate to estimates

Question 21

Is there consideration in an outputs contract?

Answer 21

Yes, because the promisor suffers a legal detriment - seller can’t sell to anyone else???

Question 22

Can a promise about not asserting a legal claim/defense be a consideration?

??????? Why/so only claim that are sure to win or sure to fail can be consideration?

Answer 22

In general, no, a promise not to assert/release of a legal claim or defense is NOT consideration UNLESS

1. the claim or defense is doubtful OR
2. the party promising not to assert/releasing the claim believes in good faith that it is valid

Question 23

Examples of promises that are binding w/out consideration:

Answer 23

1. Promise to it debt barred by at statute of limitations
2. Promise to perform a voidable duty
3. Material benefit rule
4. Promissory estoppel

Question 24

Material Benefit Rule

Answer 24

When a party performs an unrequested service for another party, the performing party can enforce the promise of payment for material benefits received to the extent necessary to prevent injustice

MODERN TREND