III. Consideration

Question 1

General Rule

Answer 1

Courts will enforce a compise as a contract only if it is supported by consideration or a substitute

Question 2

Elements for consdiration

Answer 2

1. Must ahve a bargained for exchange
2. and that which is bargained for must be considered of legal value (e.g. benefit or detriment)

Question 3

Bargained for Exchange

Answer 3

the promise must induce the determinet and detriment must induce the promise (gifts are not a bargain)

• act or forebearance must be of benefit to promisor
  
  • need not be ecomonmic
• Promise for something already done does not satisfy bargain
  
  • Except:
    
    • when past promise unenforceablb/c of technicality, new promise on old act okay.
    • in response to emergency, promise to pay
      *

Question 4

Legal Value: adequacy of consdiration

Answer 4

generally do not inquire into the adquacy unless completely devoid of value (token).

SHam consideration also insufccient if not paid.

Consideration will come even if value never exists if there was a possibility for value

Question 5

Legal Value: Legal Benefit and Legal Detriment Theories

Answer 5

Majority say that a party incur deterimnet while minority saying passing benefit to other party is sufficient

Question 6

Preexisting legal duty not consdiration

Answer 6

Insufficeint to promise existing legal duty EXCEPT WHERE:

1. new or different consdireation is promised
2. promise is to ratify a voidable obligation
3. prexisting duty is owed to a 3P rather than promisor
4. honest dispute ast toduy OR
5. unforeseen circumstnaces sufficeint to discharge party

Good faith agreement modifying a contract subject o UCC needs no consdieration to be bidnig

Question 7

Forebearance to Sue

Answer 7

Promise to refrain from suing on a claim may constitutione consdieration if claim is valid or claimant believed in good faith it was

Question 8

Mutual and Illusory Promises–Requirement of Mutality

Answer 8

• Consideration must exist on both sides of a contract.
• If only one party is bound, the promise is illusory
• Will often supply implied promises to infer mutuality
• Contracts that Satisfy: Reqruiement and output; conditional promise unless condition within promisor control; party has right to cancel if right somehow restricted; exclusivty agreements; voidable promises; unilateral and option k; and gratuituious suretyship promises
• Right to choose alternative courtses: illsuory unless every alternative involves legal deteriment
  
  • wont be found illusory if 1) at least one alt inovlves legal deteriment and power to choose rests with promisee or 3p; or 2) a valuable alternative is actually selected