Consideration (Or Valid Substitute) Flashcards
consideration
bargained-for exchange of any act or forbearance that benefits the promisor OR causes detriment to the promisee
- Past / Moral Consideration: NOT sufficient
- Illusory Promises: are INVALID; occurs when one party has no obligation to perform
- Promise of Gift: NOT sufficient
- Sham/Nominal/Token Consideration: NOT sufficient
consideration substitutes/exceptions
- material benefit rule
- promissory estoppel
- promise to pay a non-legally enforceable past debt
material benefit rule
a promise made in recognition of a benefit previously received is binding to the extent necessary to prevent injustice
- BUT NOT applies when:
1. conferred as a gift, OR
2. value of promise is disproportional to the benefit conferred
promissory estoppel
applies when:
1. a party reasonably & foreseeably relied to their detriment on other party’s promise,
2. promisor reasonably expected a change of position in reliance, AND
3. it’s necessary to avoid injustice
promise to pay a non-legally enforceable past debt
is binding WITHOUT new consideration if in writing
modifications of contracts
requires:
1. mutual assent, AND
2. new consideration (UNLESS an exception below applies)
pre-existing duty rule (CL)
past performance or a pre-existing duty is NOT adequate consideration
Exceptions:
1. addition or change in performance,
2. unforeseen circumstances: a fair and equitable modification due to severe unanticipated circumstances AND contract is NOT fully performed by either party, OR
3. 3P Promise: where duty was owed to a 3P (NOT promisor)
UCC modifications of contracts
NO consideration is required to contract modifications made in good faith
- BUT must have a writing if:
1. it falls within the statute of frauds, OR
2. OG K states that modification must be in writing
I think it is the new modified contract
