(B)(1) Consideration - Bargain and Exchange Flashcards
consideration
if there is a valid offer and acceptance that creates an agreement can be legally enforceable if there is consideration
bargain and exchange
valuable consideration is evidenced by a bargained-for change in the legal position between the parties
standard of review for consideration - most courts
most courts conclude that consideration exists if there is a detriment to the promisee, irrespective of the benefit to the promisor
standard of review for consideration - minority of courts
a minority of courts look to either a detriment or a benefit, not requiring both
standard of review for consideration - restatement (second) of contracts
the second restatement asks only whether there was a bargained-for exchange
legal detriment and bargained-for exchange
for the legal detriment to constitute sufficient consideration, it must be bargained for in exchange for the promise
legal detriment and bargain-for exchange - “mutuality of consideration”
the promise must induce the detriment, and the detriment must induce the promise
legal detriment and bargained-for exchange - consideration can take the form of (4):
(i) a return promise to do something;
(ii) a return promise to refrain from doing something legally permitted;
(iii) the actual performance of some act; or
(iv) refraining from doing some act
gift distinguished from bargained-for consideration
a promise to make a gift does not involved bargained-for consideration and is therefore unenforceable
example #1: is a promise by A to give B $1,000 when B turns 21 years old enforceable?
a promise by A to give B $1,000 when B turns 21 years old is not enforceable because the act of attaining the age of 21 is not bargained for and is thus not sufficient consideration—there also can be no reliance on the promise (B will turn 21 years of age regardless of A’s promise), so promissory estoppel does not apply
example #2: is A offering B $1,000 to quit smoking enforceable?
yes - if A offers B $1,000 to quit smoking, it is assumed that A is bargaining for B’s act and that B would rely on the promise of the payment when he quit smoking
test to distinguish a gift from valid consideration
whether the offeree could have reasonably believed that the intent of the offeror was to induce the action—if yes, there is consideration, and the promise is enforceable
promise to make a gift - enforceability under the doctrine of promissory estoppel
A party’s promise to make a gift is enforceable under the doctrine of promissory estoppel if the promisor/donor knows that the promise will induce substantial reliance by the promisee, and the failure to enforce the promise will cause substantial injustice
