Consideration

Question 1

Assuming there was mutual assent……issue whether consideration

Answer 1

for an enforceable K exists when it is a bargained-for exchange.

Question 2

Restatement 71 states …

Answer 2

“a promise is enforceable as a contract when it is supported by consideration”

Question 3

A promise is supported by consideration when it is ____ __.

Answer 3

bargained for

Question 4

A promise is bargained for when …..

Answer 4

each of the 3 elements are satisfied.

Question 5

1)

Answer 5

There is a promise or performance by promisee

Question 6

2)

Answer 6

the promisor’s promise was given to INDUCE the promisee’s promise or performance

Question 7

3)

Answer 7

the promisee’s promise or performance was INDUCED by the promisor’s promise

Question 8

Subject matter of K

Answer 8

We don’t care what is (can be a peppercorn)
POLICY:
-parties free to K whatever want & attach whatever value want
-helps further economy

Question 9

if value looks ‘iffy’

Answer 9

not a consideration problem……–can talk about later in defenses if have issue

Question 10

doing or not doing something CAN BE something of value

hamer v. Sidway

Answer 10

Hamer v Sidway
(nephew refrained from smoking, etc until 21-agreed to be good & he had legal right to back then.)
RULE: a giving up of legal right is something of value

Question 11

performance may be

Answer 11

• an act other than the promise or
• forbearance/refrain from or
• creation, modification, or destruction of a legal relation

Question 12

Gifts are NOT

Answer 12

bargains for exchange

• look at lang
• substance of each clause (gratuitous promise?)

Question 13

Pre-existing duty

Answer 13

NOT consideration.

Question 14

Past performance/Past Consideration Rule

Answer 14

A Promise to pay for PAST ACTS performed or past debts is NOT ENFORCEABLE UNLESS Exceptions***

Question 15

Tools to analyze:

Answer 15

• primary purpose of promisor (if to obtain something usu. consideration)
• performance confers a substantial benefit on promisor (or)
• imposes a significant detriment on the promisee.

Question 16

Exceptions for PAST consideration

Answer 16

two:

1) Promise made in GRATITUDE for past Benefits received
- a promise made out of genuine sense of gratitude for some past valuable benefit conferred ( MAY be enforceable)
2) Promises to pay OBLIGATIONS discharged by Operation of Law

Question 17

Promises to pay obligations discharged by Operation of Law (exception to past consideration)

Answer 17

A Past obligation has become unenforceable Due to the Operation of law IS enforceable where the original obligor makes a LATER promise to Satisfy the Unenforceable Obligation

1) expiration of SOL
2) Discharge of Debt through bankruptcy
3) Incapacity of the Obligor a the time of his original promise

Question 18

General rule: a pre-existing duty ____ ___ __ _______.

Answer 18

CANNOT serve as consideration

Question 19

Exceptions to pre-existing duty rule

Answer 19

If both parties have assumed new duties under a modification, then there is consideration and the pre-existing duty does not apply.
If there were unforeseeable circumstances and there was good faith in thinking that the consequences were unforeseeable in the performance of the contract, then the pre-existing duty rule does not apply.
The UCC says that you do not need new consideration to make a modification under a contract.

Question 20

bargain for exchange language

Answer 20

here….was consideration as both parties were given incentive to enter into the bargain by the prospect of receiving a benefit from the other.