Consideration

Question 1

What is consideration?

Answer 1

bargained for exchange

Question 2

What is the benefit/detriment test?

Answer 2

Whether there is a benefit to the promisor and/or a detriment to the promisee

Question 3

What is the legal detriment test?

Answer 3

Whether the promissee is:

(1) doing something he had a legal right NOT to do (preexisting duty), or
(2) forgoing some activity he HAD a legal right to do

Question 4

What is an illusory promise?

Answer 4

Promise of performance that leaves performance to the unlimited discretion of the promising party. DOES NOT constitute consideration

Question 5

What is a gratuitous promise?

Answer 5

Promise to make a gift, generally unenforceable due to insufficient consideration.
BUT gratuitous transfers are legally binding.

Question 6

What is the rule regarding past or moral consideration?

Answer 6

A promise in exchange for something already given or performed is NOT supported by consideration

Question 7

What is the exception to past or moral consideration?

Answer 7

A written promise to pay a debt barred by limitations

Question 8

What is the material benefit test?

Answer 8

Minority rule. A promise made in recognition of a past benefit conferred is enforceable if:

(1) promisee conferred the benefit on the promisor (not a third party); and
(2) the benefit is material
(ex. A sees that B is in grave danger and heroically intervenes to save the latter, injuring himself in the process. B gratefully promises to compensate A for his efforts. The court enforced the promise because A’s efforts bestowed a material benefit (the saving of a life) on B.)

Question 9

What is promissory estoppel?

Answer 9

Promisee that reasonably relies to his detriment on gratuitous promise may be able to enforce that promise even w/o consideration

Question 10

What are the 4 requirements of promissory estoppel?

Answer 10

(1) a promise
(2) foreseeable reliance
(3) actual reliance induced by the promise
(4) injustice w/o enforcement