Consideration And Forbearance Flashcards
To constitute consideration, a performance or a return promise must be?
Bargained for.
What are the two elements of consideration?
- Bargained-for Exchange. Promisee’s performance/return promise sought by promissor in exchange for Promissor’s promise.
- Legal Value. It has value in the eyes of the law and is a benefit to the promisor or a detriment to the promisee.
A consideration is said to have legal value when it has value in the eyes of the law and is a benefit to the ____________ or a detriment to the _____________.
Promisor, promisee.
When there are two promisors and two promises for purposes of the test, the __________ is the party whose promise is sought to be enforced. The __________ is the party who is suing to enforce the promise.
Promisor, promisee.
In a promise for a promise, is performance required for consideration to take place?
No.
What is it considered when there is a benefit to the promisee and a detriment to the promisor?
Unenforceable gift promise.
What is needed for sufficient consideration?
Value in the eyes of the law.
What three things are not considered sufficient consideration?
Love and affection, the obvious, and prayers/magic/spells.
What does adequate consideration refer to? As a general rule, do courts inquire into the adequacy of consideration? Are there any exceptions?
The quantity of the amounts exchanged (this for that). No. Exceptions: Fungible for fungible (capable of interchange; e.g., US$ for US$, brick for brick), nominal consideration, and/or before decreeing specific performance (in equity).
Is nominal consideration adequate consideration? Why or why not? Any exceptions?
Generally, no. It is consideration in name only and is not truly bargained for. Exception: If nominal consideration is recited in writing (even if not actually paid), courts will consider it to be adequate for option contracts (Restatement 87).
Forbearance is an agreement not to exercise a legal right. You must have an __________ and ____________ belief that you possess the right.
Honest, reasonable.
With forbearance, what standard is used to determine the honest belief? What about the reasonable belief?
Honest belief - Subjective (does the individual honestly believe?)
Reasonable belief - Objective (would a reasonable person believe?)
Refraining from suing on an invalid claim is consideration if (name two circumstances)?
- Even if unclear whether valid or not
- If refraining party believes it’s valid
*Note: A good-faith showing is needed if claim that invalidity was obvious. If no good-faith claim validity, there is consideration if refraining from suing written instrument executed by someone who has no duty to execute it.
