Round 2 Lecture 1

Question 1

consideration

Answer 1

whatever is given in exchange for something else (a promise to do something or refrain from doing something)

Question 2

bilateral contract

Answer 2

promise given in exchange for another promise (ex: your lease with your landlord)

Question 3

unilateral contract

Answer 3

promise given in exchange for an action or refraining from acting

Question 4

requirements to have a valid consideration

Answer 4

• the consideration must be bargained for by the parties (intent)
• the consideration must have legal sufficiency (legal value)

Question 5

the legal consideration must have legal sufficiency

Answer 5

Legally Sufficient Value may be established by: [4316.08]

(1) promising to do something that the promisor has no prior legal duty to do (e.g., promising to pay money for the promisor’s goods);
(2) performing an action that the promisor is not otherwise obligated to undertake; or
(3) refraining from exercising a legal right which the promisor is otherwise entitled to exercise.

Question 6

legal detriment to promisee

Answer 6

detriment means any act which occasioned the offer the slightest trouble or inconvenience and which the offer was not otherwise obliged to perform or refrain from performing

Question 7

legal benefit to promisor

Answer 7

benefits means anything of slight or trifling value to the offeror

Question 8

adequacy of the consideration or fairness of the bargain are…

Answer 8

irrelevant as to existence or sufficiency of consideration

Question 9

illusory promises

Answer 9

• imposes no contractual obligation on promisor and therefore there would be no binding contracts
• no real promise
• no detriment to promisor or duty imposed
• examples: “option to cancel” or “best efforts” provisions

Question 10

contracts with “option to cancel” provisions

Answer 10

the requirement that notice be given to exercise the cancellation privilege is legal consideration and the contract is not illusory

Question 11

contracts with “best efforts” provisions

Answer 11

the obligation of a party to use “best efforts” in performing an obligation is legal consideration and whether best efforts were exerted will be tested against a reasonable standard and the contract is not illusory

Question 12

a pre-existing contractual obligation ….

Answer 12

is not consideration supporting enforcement of anew promise

Question 13

common law modification of an existing contract

Answer 13

consideration required to support the modification agreement

Question 14

UCC 2-209 modification of an existing contract

Answer 14

no consideration required to support the modification agreement (but modification must be requested in good faith and not by coercion)

Question 15

restatement (second) of contracts 89

Answer 15

modification of an executory contract is binding without consideration if it is fair and equitable in light of facts that could not be reasonably anticipated by the parties (sometimes referred to as the unforeseen difficulties rule)

Question 16

creditor

Answer 16

a person who is owed money by a person who is referred to as a debtor

Question 17

as to a liquidated and undisputed debt

Answer 17

a partial payment, even if offered as payment in full, will not discharge the entire debt; but If additional or different consideration is given (paying early, paying in dif. form) debt is discharged (economic equivalency of dif. consideration)

Question 18

as to unliquidated and disputed debt

Answer 18

(a legitimate dispute as to what is owed by the debtor)

-acceptance by the creditor of a lesser sum discharges the debt if certain elements are present

Question 19

elements that need to be present to discharge the debt (as to unliquidated and disputed debt)

Answer 19

• the dispute as to what is owed is genuine end not frivolous
• the debtor in good faith offers a partial payment as payment in full
• the partial payment accepted by the creditor

Question 20

payment by check exceptions under UCC

Answer 20

• large orgs can advise a debtor that any offer to settle for less than the debt must be made to a particular official (because they receive thousands of checks each day)
• if within 90 days of cashing a full payment check the creditor offers repayment of the same amount to the debtor there is no accord and satisfaction (applies to all creditors)

Question 21

promissory estoppel

Answer 21

enforceable agreement w/o consideration
-technically an equitable remedy, no contract was actually formed, and this remedy is baed on promisee’s detrimental reliance on the promise made by the promisor

Question 22

equitable remedy

Answer 22

to avoid an unjust situation -where the aggrieved party cannot sue for breach of contract because no contract exists-but where the aggrieved party has suffered losses similar to those he or she would have suffered if a contract existed and the other party failed to perform

Question 23

elements of promissory estoppel

Answer 23

1) a promise made (but doesn’t have to be as certain and definite)
2) reasonable reliance by promisee
3) substantial economic detriment to the promisee results- the promisee’s reliance results in financial losses to the promisee
4) an injustice would occur without relief (i.e. so remedy to the promisee)- a subjective element

Question 24

ruling of Hoffman v. red owl stores inc

Answer 24

all negotiations are verbal - no contract
sue but they sued on the grounds of promissory estoppel and won :
-a contractor is bound by its bid to a general contractor if the subcontractor’s bid induced the general contractor to submit a bid and accept an offer for a construction project.
-if the subcontractor fails to honor that promise, injustice to the general contractor can only be avoided by enforcement of the subcontractor’s bid.

Question 25

equitable remedy

Answer 25

court order to force party to perform their part of the contract-can’t sue for breach, but can get what you were promised