Consideration - Forbearance of Suit

Question 1

D.C.B. (Plaintiff) and Harold J. Arkin and Zellers Inc. (Defendants)
(Forbearance of Suit As Valid Consideration Rules)

Issues:
- Does forbearance of suit count as valuable consideration even if lawsuit is bogus?

Answer 1

Rules:
Forbearance of suit will count as valuable consideration if:
- If the underlying tort claim is valid (assuming Zellers had a right to sue DCB), then the promise of forbearance of suit is valid and therefore binding. As a result the exchange of promises is valid and DCB would have to pay
1) If the underlying tort claim is invalid, then the promise of forbearance of suit is still valid in consideration if three things are satisfied:
(1) the forebearer had to honestly and objectively believe in good faith that it was a valid claim
(2) that belief must be reasonable in the circumstances even if its incorrect (subjective belief)
(3) they must have had a real and honest intention to sue in tort (can’t be matter of extortion)
2) If the promise not to sue in exchange for money that had already been paid (as opposed to a promise to pay) then the underlying tort claim is valid