Consideration [IN PROGRESS]

Question 1

Consideration is

Answer 1

a contract requirement in which there must be a bargained for exchange

Question 2

A promise is supported by consideration if:

Answer 2

1. It induces a legal detriment to the promisee, and the promisee’s detriment induces the promise.
2. The reciprocal nature of detriment for promise gives rise to a bargained for exchange

Question 3

A conditional gift ______ supported by consideration

Answer 3

is not

Question 4

Kirksey v. Kirksey

Answer 4

Promises to make gifts are generally not enforceable because they lack consideration, even if they have conditions attached to
them.

there was no consideration where someone was permitted to live on land if they moved. Although they suffered a detriment by leaving their home to move, the promise was not induced by the detriment. Therefore, it was merely a condition to a gift, not consideration

Question 5

Hamer v. Sidway

Answer 5

If the promise to make a gift is induced by the detriment, then there will be a
contract.

forbearing from smoking and drinking is valid consideration

Question 6

DAHL V. HEM
PHARMACEUTICALS

Answer 6

If one party makes a promise in exchange for another party’s act or performance, and the other party completes that act or performance, there is a binding contract between the parties.

Question 7

Consideration does not exist where it is only

Answer 7

nominal or is merely a sham.
Newman v. Hunter (worthless stock)
2. Restatement of Contracts §71

Question 8

Consideration for detriment previously suffered does not arise to consideration because

Answer 8

the promise did not induce that
detriment. BUT, a court may still enforce past consideration.

Question 9

What past consideration may still be enforceable without consideration

Answer 9

Agreements to pay discharged debt or moral obligations

Question 10

For there to be consideration, the promisee must suffer

Answer 10

a legal detriment, a requirement to act or refrain from acting, that is induced by the promise.

Question 11

If a party does or promises something that they are legally already obligated to do

Answer 11

they have not incurred a legal detriment that will amount to consideration

(ex: minor agreeing not to drink alcohol is not a valid contract because they already have a pre-existing duty to refrain from drinking alcohol.)

Question 12

When might the court find that there was no bargained for exchange?

Answer 12

Where there is an extreme disparity in value

Question 13

Restatement of Contracts §89

Answer 13

Modification will be allowed if is fair and
equitable; or By statute; or To the extent that justice requires in view of a material change in position in reliance on the promise.

Question 14

Does it matter if the consideration is inadequate in light of the agreement?

Answer 14

No, it only matters that the parties have incurred a bargained for exchange. (Consideration will be satisfied if so)

Question 15

A party may allow a reformation of the contract where the circumstances have changed

Answer 15

to create an inequitable outcome. (Brian Construction v. Brighenti)

Question 16

Alaska Packers v. Domenico

Answer 16

no consideration where the sailors required a higher wage to continue an expedition

Question 17

When, if ever, can settling a lawsuit serve as consideration?

Answer 17

Settling a lawsuit can serve as consideration, so long as the party believes, in good faith, they have a legal claim

The detriment is refraining from exercising a legal right to claim a judicial remedy.

Question 18

Dyer v. National By-Products

Answer 18

does not matter if the the claim has merit, but only if the claim is believed to have merit in good faith

Question 19

Restatement of Contracts §74

Answer 19

Claim settlement is encouraged

[As with Dyer, most courts have read a “good faith”
requirement into (b); i.e., honest and reasonable]

Question 20

Past consideration can be enforced if

Answer 20

necessary to prevent injustice

Question 21

Webb v. McGowin

Answer 21

Past consideration permitted because
someone saved someone’s life, a material benefit, of which is a
service that could be implied they would have contracted for.
The subsequent agreement to pay money was a ratification of
the contract)

Question 22

Restatement of Contracts §86

Answer 22

(1)A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.

(2) A promise is not binding under Subsection (1)
if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched;
or
to the extent that its value is disproportionate to the benefit.

Question 23

A promise to pay past debt

Answer 23

is generally enforceable even though no
consideration is provided

Question 24

A promise to pay for benefits or services received will

Answer 24

generally be enforceable without consideration. The subsequent promise will generally be considered a ratification of an implied offer

Question 25

Promissory Estoppel

Answer 25

Promises that foreseeably induce reliance on the part of the promisee will often be enforceable without consideration under the doctrine of promissory estoppel. Restatement of Contracts §90

Question 26

3 elements of Promissory Estoppel

Answer 26

1. Promisor should reasonably expect to induce action or forbearance; 2. Action or forbearance occurs as a detriment to the promisee; and 3. Enforcement of the promise can prevent injustice.

Question 27

Promissory Estoppel can serve as a substitute for for consideration or as a cause of action where

Answer 27

there is no contract but a promisee relies to their detriment

Question 28

For promissory estoppel to apply, a promise must

Answer 28

(1) reasonably induce reliance, (2) the reliance causes a detriment to the party, and (3) injustice can be avoided through enforcement of the promise. Second Restatement § 90

Question 29

Hoffman v. Red Owl

Answer 29

Promissory estoppel can substitute for a written contract

Question 30

Reliance can also prevent an offeror from withdrawing their offer if

Answer 30

it is reasonable that an offeree will rely on that offer

Question 31

Award will generally be limited

Answer 31

as justice requires; sometimes reliance, sometimes expectation

Question 32

Parol Evidence limits

Answer 32

the extent that parties can introduce extrinsic evidence before the contract was signed

Question 33

Restatement of Contracts §214

Answer 33

A writing is more likely to be impartial and accurate than memory from the distant time ago when negotiations were taking place.

Question 34

Restatement of Contracts §210

Answer 34

i. A document is intended to be integrated if it is intended as the final expression of the agreement. (a merger clause can indicate that the contract is completely integrated) ii. Partial integration: a contract that does not contain all the terms and is not fully complete on its own. iii. Total integration: a document that contains all the terms of an agreement.

Question 35

A document is intended to be integrated if

Answer 35

it is intended as the final expression of the agreement. (a merger clause can indicate that the contract is completely integrated)

Question 36

Partial integration

Answer 36

a contract that does not contain all the terms and is not fully complete on its own

Question 37

Total integration

Answer 37

a document that contains all the terms of an agreement.

Question 38

Where an agreement is partial

Answer 38

no evidence may be introduced that contradict the terms of the written document

Question 39

Where there is a total integration

Answer 39

no supplementing evidence may be introduced.

Question 40

Does total integration bar subsequent oral agreements

Answer 40

no

Question 41

Who determines if there is partial or total integration

Answer 41

judge

Question 42

What is generally upheld

Answer 42

Merger Clauses

Question 43

Parol Evidence does not apply to

Answer 43

aid in the interpretation of an ambiguous term

Question 44

REST. § 71

Answer 44

REQUIREMENT OF EXCHANGE * (1) To constitute consideration, a performance or a return promise must be bargained for. * (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. * (3) The performance may consist of * (a) an act other than a promise, or * (b) a forbearance, or * (c) the creation, modification, or destruction of a legal relation. * (4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

Question 45

HARRIS V. WATSON

Answer 45

For policy reasons, a promise to pay additional money during times of danger does not constitute adequate consideration to support a contract and will not be upheld.

Question 46

STILK V. MYRICK

Answer 46

A contract for services cannot be modified without the payment of additional consideration.

Question 47

ALASKA PACKERS ’ ASS ’N V. DOMENICO

Answer 47

If parties enter a new agreement under which one party agrees to do no more than he was already obligated to do under an existing contract, the new agreement is unenforceable for lack of consideration.

Question 48

BRIAN CONSTRUCTION

Answer 48

“[W]here a contract must be performed under burdensome conditions not anticipated, and not within the contemplation of the parties at the time when the contract was made and the promisee measures up to the right standard of honesty and fair dealing and agrees, in view of the changed conditions, to pay what is then reasonable, just, and fair, such new contract is not without consideration.”

Question 49

Restatement v. UCC on Modifications

Answer 49

Restatement § 89(a) = fair and equitable in view of circumstances not anticipated by the parties when the contract was made UCC § 2-209 must meet good faith test but no consideration needed

Question 50

Historical vs modern approach for consideration

Answer 50

Historically / Some Courts: Benefit Promisor / Detriment Promisee Modern Approach: Bargained-for Exchange

Question 51

Historical vs modern approach for modification

Answer 51

* Historically: Pre-Existing Duty Rule * Modern Approaches: Restatement & UCC

Question 52

REST. §79

Answer 52

ADEQUACY OF CONSIDERATION; MUTUALITY OF OBLIGATION If the requirement of consideration is met, there is no additional requirement of . . . equivalence in the values exchanged

Question 53

Disparity in value . . . sometimes indicates that the purported consideration

Answer 53

was not in fact bargained for but was a mere formality or pretense. Such a sham or “nominal” consideration does not satisfy the requirement of §71.

Question 54

Is there consideration when a promise has no value (a “worthless piece of paper”)?

Answer 54

No, Something that does not have value cannot constitute consideration.