Module 7 Flashcards
if you employ someone to do work and when they finish you promise to pay them extra money because they did such a good job, can that person recover the extra money?
No, because lack of consideration is not grounds for restitution
What are the three essential elements of consideration?
1) legal detriment
2) . Determine inducing the promise
3) The promise inducing the detriment
If you’re a police officer and you respond to a reward for information leading to an arrest, can you recover?
No because you’re only doing what you’re legally obligated to do: Pre-existing duty rule
If you promise to sell your TV to your friend for $50, when it is actually worth 1000, is there proper consideration to support your promise?
Yes, if there is an element of exchange in the agreement
If your dad promises to give you a house for a Christmas present and then one of your brothers gives you one dollar to pay to your father for consideration, is that enough to support the promise?
No because the promise is not bargained for
If you are employed by a company with a set salary and performance bonus, but they refuse to pay you the bonus because the consideration for your work was the salary and there was no consideration for the bonus, who will prevail?
You, because one consideration can support many promises
If you sign an agreement without reading it, what is the result?
If the terms objectively contain the appearance of a bargained for exchange, consideration is present
If you owe someone $10,000 but later they tell you you can pay eight if you pay it in one week, and you do that, and one year later they say you breached the contract and they want the $2000 remaining on the loan, what will the court say?
The surrender of the $10,000 claim was supported by the new consideration, which was the right to receive payment within one week
If you owe someone $10,000, but you can’t afford to pay it, so you write a check for $1000, and write on the back “accept as payment in full” and they cash it, what result?
The $9000 balance is still owed if there was no good faith dispute between the two regarding the amount owed, or if the person was not aware of the basis of the dispute
If you owe someone $20,000, and you agree to pay so long as your union does not order you to walk off your job, and later you are ordered to walk off your job, do you have an obligation to pay?
No because your promise to pay so long as your union didn’t order you to walk off your job was outside of your control
If your mom agrees to give you $100,000 because you have taken care of her for many years, will the court enforce that promise?
No because it did not induce any detriment from you
If you tell your friend that you promise to buy them lunch if they will pay you the $100 they owe you, is that consideration?
No because your friends performance was something he was already legally obligated to do: Pre-existing duty rule
If you promise to do something for a friend and in exchange they promise to either babysit your kids or pay you $500 that they already owed you, is that valid?
No because the option to pay the debt they already owed makes the entire agreement void for failure of consideration, even though the babysitting option is valid consideration
Do all contracts require consideration?
No, formal contracts do not, and some informal contacts are exempt (like promises that are enforceable because they have induced un-bargained for reliance)
What is the moral obligation exception?
A promise made in fulfillment of a previous moral obligation to pay for a benefit that has been given the promisee is sufficiently supported by moral consideration
What do the courts say about past consideration?
A) majority view: that is not consideration
B) minority view: accepts the moral obligation exception
What are the five categories that the moral obligation exception is divided into?
A) The promise relates to a prior contractual or quasi-contractual debt that still exists as an enforceable obligation
B) A material benefit was previously received by the promisor
C) there was a prior legal obligation that was discharged by operation of law
D) there is a promise not to avoid an unavoidable duty
E) there’s a promise based on previous unenforceable obligation
What are the two views on promises to pay pre-existing debts?
A) modern view: the promise is unsupported by consideration because the past debt was not incurred in exchange for that promise. (if the past debt is still existing/enforceable, a promise to pay is enforceable as long as it does not exceed the amount of the pre-existing debt)
B) UCC: if the promise is made in an instrument (check/note) that is governed by the UCC, no new consideration is required in order to enforce the instrument
What is assumpsit?
A legal action for breach
What is the modern view on promises to pay for benefits received?
A subsequent express promise to pay for an act is enforceable, and a promise to pay for services rendered as a favor is also enforceable
Ie) if you request your friend to do something, and they do it, unless there was an understanding of gratuitousness, you are liable on the implied promise to pay the reasonable value of the services
What happens if someone promises to pay you a certain amount, but withdraws the promise before you accept?
There’s no mutual assent and no consideration present, so there’s no reason to enforce that promise
Can you make a new promise to pay a certain amount in order discharge a legal obligation?
Yes that is enforceable without new consideration and without mutual assent
What are the two views on past consideration?
A) majority view: a promise to pay for services rendered at request/favor without expectation of payment is not enforceable. Past consideration doesn’t support promise
B) Minority view: past consideration create a moral obligation that supports the subsequent promise, even if it was performed without expectation of payment.
What happens when the service/benefit is conferred without request?
Cause of action arises to recover the reasonable value of those services under the rules of quasi-contract
If you receive unrequested benefits, does that create a legal obligation?
A) majority view: if a subsequent promise to pay is made, it isn’t enforceable
B) minority view: yes, except the moral obligation concept and the doctrine of promissory restitution
C) restatement two: if it is followed by a receiver’s promise to pay it is enforceable without consideration.
What is promissory restitution?
The action is based on the terms of the promise and any conditions must be fulfilled for the action to lie
What does a promise to pay a debt do to the statute of limitations?
Starts it running anew
What are the two theories on promising to pay a discharged debt?
A) prior debt is sufficient consideration for a subsequent promise to pay, promises to pay a debt discharged by law should be enforced
B) bankruptcy reform act of 1978: bars enforcement of promises to pay debts except by those made in the bankruptcy proceeding itself
What is implied promise to pay?
- acknowledgment of the existence of the debt “I know I owe the money”
When doesn’t implied promise to pay work?
When there is a contrary intention indicated. Acknowledgment of the debt, and rebuttal of an implication of promise to pay ie ) “I know I owe the money, but I will never pay it”
If you pay part of a debt or give collateral what can that be?
Can be an acknowledgment of a promise to pay, so long as it is voluntary
If one joint obligor makes a promise how does that affect the others?
Unless there is an agency relationship, the others are not bound
What is indebtitatus assumpsit/general assumpsit?
A writ available to enforce claims for liquidated amounts or the reasonable value of an executed performance
