Term
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Definition
| This for that: A bargained-for exchange of consideration on each side is normally necessary for a contract to be enforceable |
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Term
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Definition
| Value given or detriment suffered in exchange for a promise, making the promise enforceable |
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Term
| Four Types of Sufficient Consideration |
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Definition
1. An act
2. Giving up the exercise of a legal right
3. A change in legal status (bankruptcy)
4. A promise to do any of the first three |
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Term
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Definition
1. Sufficiency Required: enough consideration to make the contract enforceable
2. Adequacy: or fairness is not required |
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Term
| Four Types of Insufficient Consideration |
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Definition
1. An illusory promise is insufficient consideration
2. A gratuitous promise is insufficient consideration (a promise to make a gift or obligation)
3. Past consideration is insufficient consideration
4. A promise to perform a pre-existing duty is insufficient consideration |
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Term
| Requirement contracts are valid or invalid? |
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Definition
| Valid: promises to buy all the goods you need for a certain period of time |
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Term
| Output contracts are valid or invalid? |
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Definition
| Valid: promises to sell all the goods you can produce for a certain period of time |
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Term
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Definition
1. If a duty existed prior to the promise to do it, then the promise to fulfill that duty is not valid consideration
2. Example: I promise not to kill you if you give me $10,000 |
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Term
| Two Exceptions to Pre-Existing Duty Rule |
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Definition
1. Rescission and new contract -> out with old; in with new - gets around modification problem
2. Promise to pay an unliquidated debt |
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Term
| Four Exceptions to the Consideration Rule |
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Definition
1. Promises to pay debts barred by statute of limitations
2. Reaffirmation agreements in bankruptcy
3. Charitable Subscriptions: pledges made to a charity are often enforceable
4. Promissory Estoppel:
- A promise is made by the defendant
- Plaintiff suffers detriment by reasonable reliance on the promise
- Enforcement of the promise is necessary to avoid injustice |
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Term
| Two Changes of the Common Law as to Consideration (UCC) |
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Definition
1. Contract Modifications: Modifications need no new consideration to be binding
2. Firm offers are binding although they are not option contracts (pay to hold it) |
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