Flashcards in Contract - Consideration Deck (10):
Describe the requirement for an output contract to be with consideration.
The contract is based on established production or ability to produce by the seller and the seller must sell its production to the buyer.
How does an individual incur legal detriment?
An individual can incur legal detriment by (1) doing or promising to do something that he or she had no prior legal duty to do or (2) refraining from or promising to refrain from doing something that he or she had no prior legal duty to refrain from doing (that is, by forbearance).
What are the elements of a consideration?
Consideration has two elements: (1) there must be a bargained-for exchange between the parties (if a party intends to make a gift, he or she is not bargaining) and (2) what is bargained for must have legal value.
List the exceptions to a preexisting duty.
1.Rescission and new contract;
3.Sale of goods - modification of contract.
Define "accord and satisfaction."
Agreement between two parties to settle an unliquidated debt (obligation is acknowledged, but the amount is unclear)(accord); satisfaction is payment of that amount; payment discharges all obligations; is not effective for discharging a liquidated debt, such as an installment loan.
Define "preexisting duty."
A promise to do what one is already legally obligated to do is without consideration.
Explain the difference between a liquidated and an unliquidated debt.
A liquidated debt is one in which the amount due is agreed upon. An unliquidated debt is one in which the parties acknowledge a debt but disagree as to the amount that is due.
What are the requirements for a consideration in a contract?
Each party to the contract has a benefit and detriment. The promises (detriment) are induced by the benefits and the benefits are induced by the promises (detriment). Bargained-for exchange. Consideration must actually change hands.
What promises are enforceable without consideration?
• Good-faith modification under the Uniform Commercial Code (UCC);
•Charitable subscriptions (promissory estoppels on pledge to make a gift);
•Promises barred by the statute of limitations.