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Rule: Consideration is -
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Chapter 10 law book
| Question | Answer |
|---|---|
| Rule: Consideration is - | what a person will receive in return for performing a contract obligation. |
| Example of consideration - | Dan agrees to purchase Mary's car for $1,000. Dan's payment of $1,000 is the consideration Mary will receive for her car. Title to and possession of the car is the consideration Dan will receive in exchange. Consideration can be anything, as long as it is |
| benefit to the promisor - | A promise to stay in a job until a particular project is complete (This is a benefit to the employer.) |
| a determent to the promisee - | A promise to your football coach to refrain from riding your motorcycle during football season even though you love riding it |
| promise to do something - | a promise to cook dinner for your roommate for the next six months |
| a promise to refrain from doing something - | a promise to stop drinking alcohol during exam week |
| lack of consideration - | rule: for a promise to be enforced by the courts, there must be consideration |
| A court will enforce one party's promise only if the other party promised something (an act, money, etc.) in exchange. For example - | in a bilateral contract (a promise for a promise), the consideration for each promise is a return promise. Consider this example: Sue promises to pay Mike $2,000 for his car. Mike promises to sell Sue his car for $2,000. The exchange will be done tomorrow |
| Another example of a bilateral contract, - | or a promise for a promise, occurred when the U.S. government seized control of insurance giant American International Group (AIG). The U.S. agreed to lend AIG up to $85 billion in exchange for nearly 80 percent of AIG's stock. The consideration AIG recei |
| In a unilateral contract - | (a promise for an act), one party's consideration is the promise, and the other party's consideration is the act. Suppose your professor made the following statement in class: "If any student shows up at my house on Saturday and does the gardening, I will |
| Types of Contracts - | bilateral and unilateral |
| Bilateral Contract - | promise for a promise |
| Unilateral Contract - | promise in exchange for an act |
| Promissory Estoppel - | the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract |
| One exception to the rule requiring consideration is - | Promissory estoppel |
| promissory estoppel occurs when three conditions are met - | One party makes a promise knowing the other party will rely on it. |
| The other party does rely on the promise. | |
| The only way to avoid injustice is to enforce the promise. | |
| Rule: the court seldom considers adequacy of consideration - | This rule means that the court does not weigh whether you made a good bargain. Example: Donna purchases a stereo from Celia, a friend in her business law class. Donna pays $500 for the stereo but later realizes that the stereo is not worth even $100. May |
| Illusory Promise - | A situation in which a party appears to commit to something but really has not committed to anything. It is not a promise and thus not consideration. |
| Rule of Past Consideration - | is no consideration at all. Consideration is an essential element of a contract. For a court to enforce a promise, both sides must offer consideration. |
| In the US - | businesspeople consider contracts to be very important. Contracts are highly detailed. If there is a dispute, the parties refer to the contract terms. If the parties cannot agree, a lawsuit may be filed. |
| Preexisting Duty - | Rule: A promise to do something that you are already obligated to do is not valid consideration. There are actually two parts to this rule. First, performance of a duty you are obligated to do under the law is not good consideration. |
| Second, performance of an existing contractual duty is not good consideration. | |
| unforeseen circumstances - | events that a reasonable person would not be expected to anticipate |
| If unforeseen circumstances cause a party to make a promise regarding an unfinished project, - | that promise is valid consideration. |
| If a party to a contract agrees to do additional work - | (i.e., more than she is obligated to do under the contract), the promise is valid consideration. In the pool example, if the contractor asks Gene for an additional $10,000 but agrees to add a waterfall and a deck to the pool, the promise to do the additio |
| liquidated debt - | Debt for which there is no dispute between the parties about the fact that money is owed and the amount of money owed. |
| example of liquidated debt - | Example: Natalie owes $3,000 on her credit card. She calls the credit card company and explains that she is a poor student and cannot afford to pay the entire $3,000. The credit card company agrees to accept $2,000 as payment in full. The following month, |
| unliquidated debt - | Debt for which the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount. |
| Accord and Sanctification - | An arrangement between contracting parties whereby one of the parties substitutes a different performance for his or her original duty under the contract. |
| In an unliquidated debt, the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount. A dispute over an unliquidated debt may be settled for less than the full amount if the parties enter into an acco | The debt is unliquidated (i.e., the amount or existence of the debt is in dispute). The creditor agrees to accept as full payment less than the creditor claims is owed. The debtor pays the amount they have agree on. |
| Rule An accord and satisfaction - | is an arrangement between contracting parties whereby one of the parties substitutes a different performance for his or her original duty under the contract. The promise to perform the new duty is the accord, and the actual performance of that new duty is |
| The accord is the new agreement to pay less than the creditor claims. The satisfaction is the payment, - | by the debtor, of the reduced amount. If the debtor fails to pay the new amount, the creditor may then sue for the full amount of the original debt. It pays to keep your word. |
| One way that people sometimes attempt to create an accord and satisfaction is by - | sending a check to the creditor and writing "paid in full" on the check. Under common law, in many states, this did create an accord and satisfaction, and if the creditor cashed the check, he or she was bound to accept the smaller amount as payment in ful |
| Under UCC Section 3-311 the rule remains in place but has two major exceptions. - | First, in cases of business organizations, thousands of checks may be received each day. To protect themselves, businesses may notify their debtors that any offer to settle a claim for less than the amount owed must be sent to a particular address and/or |
| Second, if a business does inadvertently cash a paid-in-full check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor. For example, if John owed $3,000 to his credit card company and he sent th | |
| Conditional Payments - | Any payment check or other form of payment that you send us for less than the full balance that is marked "paid in full" or contains a similar notation, or that you otherwise tender in full satisfaction of a disputed amount, must be sent to [address omitt |
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