III. If so, is the deal enforceable by courts? Flashcards
Consideration
A bargained for legal detriment comprised of 2 parts
2 parts of Consideration of bargained for legal detriment
- The promisor bargained for an exchange in which
- The promisee (a) promises to do something (or in fact does something) but for the contract he or she is not obligated to do or (b) promises not to do something (or in fact does not do something) that, but for the contract, he is she is legally entitled to do
a. Purpose: Under american law, not all promises are enforceable, there has to be consideration
Hamer v. Sidway
- Forbearance is consideration (in this case)
- Legal detriment to both parties
Sufficiency
- Must be legal sufficient for a binding contract
- Must have value in the eyes of law
Examples of Insufficient Consideration
- love and affection
- magic and conjuring
- nominal consideration (less than $1)
- fungible exchange: same time, place, and type of good or money exchanged
- promise to forbear suit upon invalid claim that promisor neither honestly nor reasonably thinks has possibly validity
Is moral obligation sufficient?
No it is not valid consideration
Adequacy
So long as the requirement of sufficiency of consideration is met, then there is no additional requirement for the values exchanged to be equivalent
Batsakis v. Demotsis
- Mere inadequacy of consideration does not void a contract
- Want of consideration
- Want = no consideration
- Failure of consideration
- failure = breach of contract
Schnell v. Nell
- What 3 ways does Nell say there was consideration between the parties?
1. A promise to pay on part of the plaintiffs to pay him 1¢ (nominal consideration insufficient)
2. The love and affection he bore his wife and her contribution to purchase of the property (insufficient)
3. The fact that she expressed her desire to pay them in her will, even if inoperative (moral obligation insufficient)
Fiege v. Boehm
The claim that the consideration was based on was made in good faith at the time of its inception, therefore, Forbearance is adequate consideration.
The Illusory Promise
“An apparent promise that does not amount to consideration because the promisor reserves a choice for alternative performance.”
ex. I will buy all of the cake I wish for next year from the bakery. needs to be a quantifiable estimate
Wood v. Lucy, Lady Duff Gordon
1) Rule: In exclusive dealing contracts or other bilateral contracts, one or more of the promises may be 2) implied in fact
implied promise can be found in event that reasonable efforts would be implied under intention of the parties
Sylvan Crest Sand & Gravel Co. v. United States
1) the parties entered into a contract and the promise by the U.S. was the price and the amount
2) the ability to cancel alone did not make it illusory and it is inferred that U.S. is required to give reasonable notice of cancellation
3) the option to cancel, does not wholly defeat consideration
UCC 2-309 on termination
cannot be unconscionable, and needs reasonable notification
UCC requirements on contracts
needs to have reasonable estimated amount, if there is an increase in the amount needed, needs to be reasonable (wish is not enforceable, but you can say all, need, require)
Past consideration
An act or promise that is not deemed to be considered because it occurred prior to, and therefore not in exchange for, a later promise for which enforcement is sought.
Hayes v. Plantation Steel Co.
the promise must induce to other party to act (not act then make promise)
Mills v. Wayman
1) if there is no bargain for exchange then there is no consideration 2) D saying he will pay him back is past consideration - more of moral obligation, like gift
Pre-existing Duty Rule
if you already had a duty to do something under the pre-existing contract and you don’t do anything new or different under “new” contract then there was not sufficient consideration for the “new” agreement and it can’t be enforced
Harris v. Watson
as a matter of public policy, individuals should not receive extra wages for doing their jobs, even in times of peril
Stilk v. Myrick
- Agreed with decision, disagreed with reasoning behind decision
2) This court considered the contract void because of the want of consideration (no consideration) - they had already agreed to their salary and their jobs before they left London and were not at liberty to leave their jobs
Lingenfelder v. Wainwright Brewery Co.
2) when a party merely does what he has already obligated himself to do, he cannot demand additional compensation for the work – there is no consideration there – demanding payment for more is a naked promise (nadum pactum)
When Modifying or revising contracts?
When Circumstances change – e.g. building cannot complete the house at the original price, then that might necessitate a new contract
-Requires new or different consideration
-Must be a modification that would necessitate a new contract
