Page 12 Flashcards
What are exceptions to the mutuality rule?
- unilateral contract
- limited promises
- voidable promises
- conditional promises
- alternative promises
- implied promises
- requirements/output contracts
What is an example of a limited promise?
A rental contract that allows for termination anytime on giving 10 days’ notice. Person must pay rent for 10 days, so this is a real promise
When would a promise be voidable?
On the grounds of infancy
If you’re 17 and buy a car, the contract is voidable because of infancy, so not enforceable against you, but how about the seller?
He is bound. The contract can be enforced by the minor, but not against the minor
What is a conditional promise?
When promisor only has to perform if a specified condition happens
Is a conditional promise illusory?
No because you have limited your future options since if condition doesn’t happen, you must perform
What is an alternative promise?
Promisor can discharge his obligation by choosing between two or more alternatives
What is an example of an alternative promise?
Someone promises to either paint your fence or your garage for $500
What is the general rule about alternative promises?
They are only enforceable if each performance would have been consideration if it was bargained for alone
What is the rule for alternative promises when the promisee has the right to demand one of several alternative performances?
There is consideration if any of the alternatives would be consideration
If one party is allowed to supply or determine a material term, is that illusory?
- common law: if term is material, yes
- UCC: good faith obligation, so no
Why are requirements/output contracts not illusory?
Because parties have limited their options since they must buy/sell everything to/from a person
What is the UCC rule for requirements/output contracts?
Quantity tendered/demanded can’t be unreasonably disproportionate to a stated estimate or normal amount before the output/requirement
What is the implied promise for output/requirement contracts?
That the company will remain in business
If a company goes out of business during an output/requirements contract, is that a breach?
Only if the shutdown was motivated by unprofitability of the contract, which violates a duty to act in good faith. If it was for any other reason, it is not a breach
If a legal duty existed before a new promise, is that consideration?
No
What are two different types of pre-existing legal duties that don’t constitute consideration?
- public duties
- contractual duties
How is a public duty not consideration for a new promise?
If an official promises to perform an act that is already within the scope of his duties, that is not consideration
If a police officer takes $50 to watch a store, is that enforceable?
No, the act was within the scope of his official duties
If a cop is on vacation and agrees to watch the lobby for two hours a day, is that enforceable?
Yes, because it is not within the scope of his official duties
If a witness makes an agreement with the police to tell the truth on the stand, is that enforceable?
No, because every citizen has a duty to do that, so there is no consideration
Is a threat to break a contract considered duress?
No, unless it leaves the person with no reasonable alternative
If you enter a contract under economic duress, is it enforceable?
No, assent induced by improper threat that leaves a promisee no reasonable alternative is not enforceable
If a builder contracts to put an addition on a house for $10,000, then later says he will only do it for $12,000, and there are others that would do it for less, but the person agrees and pays, is that duress?
No, because there are others that would do it instead
If after performance has started, a builder walks off the job unless you give him more money, and delay will mean major losses, is that duress?
Yes
If you owe money to a creditor and he agrees to accept less in full satisfaction of the debt, is the payment of the lesser amount considered consideration?
Not usually
What are some exceptions to the pre-existing duty rule?
- different performance
- honest dispute
- unliquidated obligations
If the debtor does something different than what he originally agreed to do, does the pre-existing duty rule apply?
No
If there is an honest dispute about whether someone owes an obligation, is payment of a lesser amount consideration to discharge it in full?
Yes
What are unliquidated obligations?
When the amount is uncertain
If an obligation is unliquidated, and a debtor pays less than he owes, is that consideration?
Yes
