LEGL Test 2 Review Flashcards
1
Q
Property
A
Legal right to exclude others from resources that are originally possessed or are acquired without force, theft, or fraud
- Known as Legal Fence
2
Q
Boundaries can be…
A
Ambiguous
- Use courts to assist
3
Q
Bundles of Rights for Property
A
i. Right to exclude
ii. Right to possess
iii. Right to use
iv. Right to sell
v. Right to control
vi. Right to gain income
4
Q
Private Property System
A
State recognizes and enforces an individuals’ rights to acquire, possess, use, and transfer scarce resources
1. The people determine how resources are distributed.
5
Q
Real Property
A
Land and interest in land (includes Buildings)
6
Q
Personal Property
A
All moveable resources
i. Divided into Tangible (physcially touched) and intangible (intellectual copyrights)
7
Q
Defining Land
A
Land ownership consists of more than the surface of the property
8
Q
Air Rights
A
i. Owner of real property possesses the air above the land to a certain extent
1. Air Rights
ii. Can be sold to another for development. What does this mean?
1. For cell towers, for development; purchase someone air rights to not block a person view in a Highrise
9
Q
Subsurface Rights
A
i. Landowner owns the liquids, gases, rocks, and minerals beneath the land
ii. Can be separately sold to another
iii. Rule of Capture: If it flows naturally, a person has rights over it. A person cannot use machinery to manipulate the resource and change it to another’s side. Can use it only to touch my side not another person’s property
be physical intrusion
10
Q
Briggs v. Southwestern Energy Production Co
A
Subsurface Rights: Company trying to extract gas from an adjacent property using machinery. Can use machinery if it doesn’t touch the adjacent property there can’t be physical intrusion
11
Q
Fixtures
A
Personal Property that has converted into real property from attaching the object or fixture to the real property.
CAN NOT TAKE these fixtures when real property is sold; unless written in contract and signed by everyone
EX: Celling Fan, Chandelier, Built in bookcase, decorative pillar
12
Q
Life Estate
A
Grants an ownership in land for the lifetime of a specified person
13
Q
Reversion Interst with Life Estate
A
If the Land reverts to the original grantor upon the death of Sally, the original grantor has a reversion interst
14
Q
Remainder Interest with Life Estate
A
If the property goes to someone other than the original grantor upon Sally’s death, that person has a remainder interst
15
Q
Future and Present Interest
A
- Reversion and Remainder property interests in life estate ownership are called future interests.
- Whereas a Life Estate is a present interest. Why? Curretnly have rights to that property
16
Q
Leasehold Estate
A
i. Property right granted to tenants by a landloard
1. Land can be leased for a definite duration (ie 2 years) or an indefinite duration
2. Tenants have a qualified possession, use, and transfer of the land
3. Can’t waste the land/reduce the value
a.Ex: Punching a hole in the wall in an apartment
17
Q
Concurrent Ownership
A
More than one person that owns property
18
Q
Joint Tenancy
A
i. Must be equal
ii. Rights of survivorship
iii. Can be partitioned
19
Q
Easement
A
a. Right of someone other than the owner to cross/use the land
b. Ways of acquiring
i. Buying directly from a titleholder or reserved in a deed
20
Q
Natural Easement
A
If property is landlocked and no access to public road, asking for permission to use their driveway to gain access to the public roads
21
Q
Negative Easement
A
Asking another to not do something on their property that would have a negative impact on your property
22
Q
Easement by Presciption
A
Using a person property openly, wrongfully(without permission) , and continuously (typically 20 years) then granted to use the other person property and they cannot stop you
23
Q
Bailments
A
i. Goods placed into another’s possession to be returned in the future.
ii. Bailor= owner
iii. Bailee= possessor of the object
iv. Key Question: Did the bailee intend to take possession of the object?
24
Q
Type of Bailment: For the sole benefit of the bailor
A
a. Slight duty of care.
b. EX: Storing my car at the friends while I am on vacation
25
Type of Bailement: Mutaully Beneficial
a. Reasonable duty of care.
b. EX: Renting a car
26
Type of Bailement: For the sole benefit of the bailee
a. High duty of care.
b. Ex: Borrowing a lawnmower
27
Rule of first possession
first to take possession of previously unowned items becomes their rightful owner.
28
Abandoned Property
The first person to take possession of an abandoned item becomes its owner—did the original owner intend to abandon the property?
29
Lost Item
The finder becomes the owner by taking possession of the item and following a legal procedure, even though the original owner did not intend to leave the item behind.
30
Mislaid things
Must be given to the owner of the premises where the item was mislaid
* person intend
31
Adverse Possession
Grants ownership of land under state law when possession is:
32
Adverse Possesions Elements
1. Open and notorious : Not hiding
2. Actual and exclusive: Only person using the property
3. Continuous:
4. Wrongful: Without permission
5. For a prescribed period of time: typically 10-20 years
33
Confusion
The process outlined involves the mixing of fungible (interchangable) goods, where owners share ownership proportionally if the mixing happens by honest mistake. To determine ownership:
Record Keeping:
If records are available, the goods are divided based on those records.
If no records exist, the goods are divided equally among all owners.
Intentional Wrongful Confusion:
If the mixing was done intentionally, ownership of the goods is granted to the innocent party.
34
Accession
Something that is added
35
Law of Accession
When people apply efforts to any raw material and change its nature into finished products, they own the finished products
36
Gift
Gift does not take place until the donor:
INTENDS to make the gift
DELIVERS the gift by physical transfer to the done
37
Constructive Delivery
Keys are representation of a car as you cannot physically give a car
38
ii. Testamentary gif
gift through a will
*Not complete until donor's death
39
Title
Document registered with the state for certain types of personal property that represents ownership
40
Deed
Document of title that transfers ownership of land
41
Type of Deed: Warrenty Deed
i. promises the grantee that the grantor has good ownership and the full power to convey it.
ii. Buyer can sue the seller if someone else claims the land.
42
Type of Deed: Special/Limited Warranty Deed:
i. Limits the liability of the grantor/seller
ii. Does not hold the grantor liable for what happened prior to his or her ownership
1.No guarantee against title defects dating from previous owners
iii.Current GA Real Estate Contracts call for a Limited Warranty Deed
43
Quitclaim Deed
Makes no guarantees other than that the grantor surrenders all claim against the land.
44
What happens when deed is not recorded...
The person does not legally own the property
45
Security Deed
A pledge of real property to secure repayment of a loan. Used in Georgia. Only between the Lender and Borrower. GA is nonjudicial foreclosure state.
46
Foreclosure
The process by which a creditor enforces its secured interest in property when the owed obligation is not fulfilled, typically through a public sale
*lender takes possession of a property and sells it to recover a debt owed by the borrower
47
Foreclosure: Judicial vs. Non-Judicial Foreclosure
Judicial: lender is required to go through court for foreclose
Non-Judicial: Doesn’t have to go through
Georgia is a Non-Judaical Foreclosure State
48
Foreclosure: Deficiency
Balance owed by the debtor to the creditor (mortgagee)
49
Right of redemption
Allows mortgagor to get back land upon payment of the full amount of the debt, including all interest and costs
50
ARTISAN’S LIEN
i. Arises when someone contributes parts and/or services to personal property and is not paid
ii. The lien is possessory
51
Mechanic’s Lien
i. Arises when someone contributes materials and/or services to real property and is not paid
ii. NOT possessory, only has priority if it is perfected by written notice
52
Nuisance
i.Public Nuisance
-Arises from use of land that causes inconvenience or damage to the public
53
Private Nuisance
1.Unreasonable use of one’s property to cause substantial interference with the enjoyment or use of another’s land
a.Only a public official can bring a claim for a public nuisance on behalf of the public
b.Already occurred and no asking court for remedy
54
Zoning
Laws that divide counties into use districts designated residential, commercial, or industrial
55
Zoning limits the use to which land can be put to that specified
Land Use: Only specified uses are allowed (e.g., industrial facilities cannot be built in residential areas).
Building Specifications: Zoning can dictate the height, size, number, weight, and location of buildings permitted on the land.
Aesthetic Requirements: Zoning may also impose guidelines for appearance, such as building color and exterior design.
56
Zoning: Variance:
Allows for use of land in a way that is not permitted under current zoning
57
Does a contract have to be in writing to be enforceable?
No, Verbal contract are just as enforceable
58
Contracts
Legally enforceable promise or exchange of promise
-Enables buyers and sellers to account for future risks or have confidence in exchanging valuables
59
Sources of Contract Law
Legislation:
-Uniform Commercial Code (UCC): Governs contracts related to the sale of goods (tangible, movable items).
-Contracts for Goods: Fall under the UCC.
Common Law:
-Based on judge-made decisions.
-Governs all other types of contracts not related to the sale of goods.
59
Bilateral Contracts
1. An Agreement of mutual promises
2. Both parties have a duty to perform when the contract is formed
60
Unilateral Contracts
1. An agreement with only one promise and in exchange for performance
2. Only one party is obligated to perform
a. EX: Lisa promises to pay Olaf $1000 if 100 units are sold at the end of the year and Olaf’s right to receive the money if he performs
61
Express Contracts
1. The parties show their agreement in words (written or oral).
2. The parties discuss the promised terms of their agreement
62
Implied-in-fact Contracts
Arises from the conduct of the parties rather than from words
63
Implied-in-law aka Quasi-Contracts
i. Judicial remedy to prevent one party from receiving unjust enrichment
ii. Remedy applies when no actual contract exists to cover the dispute
EX: You owe a credit card company $100, but you send them $200. If they keep the extract money they are unjust enrich so they reimbur you
64
Contractual Terminology
a. Valid: all required elements are met
b. Enforceable: agreement will be upheld in court
c. Unenforceable: a party had a justifiable reason for not performing
d. Void: agreement lacks an essential element
e. Voidable: at least one party can withdraw and make the contract void
65
Contractual Performance: Executed Contract
Parties have performed their promises
66
Contractual Performance: Executory Contract
Parties have not yet performed their agreement
67
Elements of an Enforceable Contrac
a. Offer to enter into a contract
b. Acceptance of the offer
c. Consideration for each promise
d. Capacity of each party to enter into a binding agreement
e. Legality
68
Offer to Contract
a. Contains a specific promise and a specific demand
b. Offeror must intend to make the offer by making a commitment to the offeree
i.TEST: Courts measure intent from a reasonable person’s perspective in the position of the offeree. This standard is known as the objective standard rather than the subjective intent of the offeror
c. General Rule: Contractual terms must be definite and specfic in order to be enforceable
i. Exception: Sale of Goods (UCC)
69
Termination of an Offer
a. Revocation: Offeror revokes offer *Only prior to acceptance
b. Rejection: offeree rejects the offer
c. Counteroffer: offeree makes a counter proposal
d. Lapse of time: Offer expires as it reached over a reasonable time limit
e. Subject Matter Destruction: Object is destroyed
f. Offeror Death or Insanity:
g. Subject Matter Illegality
70
Acceptance of an Offer
a. Acceptance of an offer is necessary to create a valid, enforceable contract
i. Bilateral contract is accepted when offeree has made the required promise
ii. Unilateral contract is accepted by performing a requested act (not by making a promise)
71
Statute of Frauds
The Statute of Frauds mandates that certain contracts must be in writing to be enforceable. These include:
1. Types of contracts requiring writing:
Sale of an interest in land
- Collateral promise to pay another’s debt
-Contracts that cannot be completed within a year
-Sale of goods over $500 (UCC)
Exception: Specially manufactured goods
2. State requirements:
-Some states require the actual contract to be in writing.
-Other states allow a written note, memo, or document signed by the party being sued to suffice, even if it's not a formal contract.
3. Merchant exception: In contracts between merchants, the writing does not need to be signed by the party being sued.
4. Exceptions to the writing requirement:
-Part-performance: For land sales, part performance, like making improvements, can eliminate the need for writing.
-Specially manufactured goods: Custom-made goods must be paid for even without a contract in writing.
-Partial or full performance: Completing part or all of the contract can override the need for written documentation.
-Judicial admission: If the party being sued admits to the existence of the contract, writing may not be necessary.
72
Lack of Meeting of the Minds
a. Fraud
b. Mistake
i. Mutual Mistake
ii. Unilateral Mistake
c. Duress
d. Undue Influence
73
Fraud
i. A misrepresentation of fact with the intent to deceive that a party justifiabliy relies on and results in injury
ii. Remedy: The defrauded party has the option to void the contract OR may enforce the contract and sues for damages resulting from the fraud (including punitive).
74
Innocent Misrepresentation
i. An unintentional misrepresentation of fact that a party reasonably relies on, resulting in harm.
ii. Remedy: The injured party may choose to void the contract.
75
Mistake: Mutual Mistake
i. Both parties are mistaken as to some fundamental/material aspect of the agreement.
ii. Remedy: Rescission by either party
76
Mistake: Unilateral Mistake
i. One of the parties to a contract is wrong about a material fact
ii. Remedy: Usually none
77
How Does a Court determine Materiality?
i. Test: Whether the parties would have contracted had they been aware of the mistake
ii. Note: The mistake must be one of fact
78
Duress
a. Action that compels another to do what he or she would not otherwise do
b. Duress means force or threat of force
i. Threat can be physical or economic
79
Undue Influence
a. When one is taken advantage of unfairly by a party who misuses a position of relationship or legal confidence
b. EX: Often arise when persons weakened by age or illness are persuaded to enter into a disadvantageous contract. People in a special relationship of power or trust may also exert undue influence
c. Remedy: Contract is voidable
80
What Controls?
Handwritten Typed Pre-printed Terms/Forms
81
Parol Evidence Rule
Rule: In a fully integrated written contract, parties cannot present evidence of oral agreements made at or before the contract's signing that would alter its terms.
When is evidence of oral agreements permitted?
i. Oral modifications made after the written contract may be admitted.
ii. Evidence clarifying the meaning of terms may be allowed.
82
Duty of Performance
Performance required by the other party as promised in the contract
83
Discharged
Occurs when the party is relieved from all further responsibility of performance
84
Condition of Performance: Condition Precedent
Something (a condition) must take place before a party has a duty to perform
85
Condition of Performance: Condition Subsequent
Excuses contractual performance if some future event takes place
86
Condition of Performance: Express Condition
Explicitly mentioned in the contract governing performance
87
Condition of Performance: Implied Condition
Not explicitly mentioned but can be read into the parties’ obligation to perform
88
Condition of Performence: Concurrent Condition
Parties have a simultaneous duty of performance
89
Payment & Delivery of Goods (UCC)
1. P ayment: If the contract doesn't specify terms, the buyer's payment is a condition that must be fulfilled before the seller is obligated to deliver the goods.
2. Delivery: When the contract lacks specifics on delivery, the UCC provides default rules:
The buyer is expected to arrange pickup at the seller's designated location.
If the contract states goods will be shipped to the buyer without further details, the seller satisfies their obligation by shipping the goods in a commercially reasonable manner.
90
Level of Performance : Complete Performance
i.Definition: Everything required under the contract has been done.
ii. Performance Level: A party that performs completely is entitled to complete performance by the other party and may sue to enforce this right.
91
Level of Performance : Substantial Performance
i. Definition: Less than full performance but greater than significant performance
ii. Performance Level: The other party is required to perform and may sue for damages resulting from the breach.
EX: Contractor hasn’t completed all the landscaping by the due date (Jan 20) but finished the building. He doesn’t finish landscaping till FEB 1.
92
Level of Performance : Material Breach
Definition: The performance is severely lacking or entirely absent.
Performance Level: The other party is excused from their obligations and may pursue damages.
93
Excuses for Nonperformance: Force Majeure
* only one that needs to negotiated into the contract
i. Must be negotiated into the contract. *If earthquake occurs, excuse your obligation to perform
ii. Excuse or delay a party’s obligation to perform if a certain extreme event occurs
iii. The event must be outside of either party’s control and not foreseeable
EX: Natural Disasters (hurricanes, floods, earthquakes, pandemics), Political Turmoil(strikes, terrorist attacks, war)
94
Excuses for Nonperformence: Impossibility (Common Law)
i. Performance is illegal or physically (impossible)
ii. Higher Standard
EX: Subject Matter of contract destroyed (sell 10 cows and fire occurs where cows are deceased and subject matter is destroyed), Person promising those services dies that party is discharged from performance
95
Excuses for Nonperformence: Frustration of Purpose (Common Law)
i. occurs when an unforeseen event that undermines a party's principal purpose for entering into a contract.
EX: Susie contracts with a swim coach to help with Olymics. After executing the contract but before coaching begins, Susie gets into a car accident and is left paralyzed. The swim coach is ready to coach her but Susie’s purpose to enter the contract has been frustrated. Purpose for entering into contract has been frustrated
iii. Mere increased difficulty or reduced profitability doesn’t count for impossibility or frustration of purpose
96
Excuses for Nonperformence: Commercial Impracticability (UCC)
i. Circumstances greatly increase the difficulty and violate the parties’ reasonable expectations
ii. If goods are reasonably available from another supplier, can’t use this excuse
iii. Lower Standard
Ex: A manufacture can be discharged from an obligation to make goods for a buyer when its major source of raw material that they need has been unexpectly interrupted
97
Breach of Contract
Arises when a party does not accomplish the obligation of contractual performance
98
Remedies
Damages (money) and Equitable Remedies
99
Damages: Compensatory
Damages that aim to put the plaintiff in the same position as if the contract had been performed
100
Damages: Liquidated:
i. When the amount of damages is stipulated in the contract
ii. Ex: If contract is breached you have to pay 5000 in liquidated damages
1. Can’t use liquated damages to serve as a penalty
101
Damages: Consequential
Damages for the downstream impact of the breach (arises from unusual foreseeable losses)
I.E. Lost Sales
102
Compensatory Damages
a. Buyer Breaches
i. Lost Profits: If buyers fail to pay but seller make a replacement sale for a lower price
1. Agree to sell 10 textbooks for 100 but buyers doesn’t pay but makes a sale to another for 70 then can sue for difference
ii. Contract Price: If buyer fails to pay for goods/services and seller can’t resale
b. Seller Breaches
i. Difference between the market price versus the contract price
1. Occurs when the seller fails to deliver goods or services and it is procured at a higher price
103
Duty to Mitigate
a. Victim of a breach of contract must take reasonable steps to mitigate damages
i. If a tenant moves out early breaking his lease, the landlord must try to find someone else
104
Mitigation
reducing or minimizing the damage
105
Equitable Remedies
– if money damages are not adequate
a. Specific Performance
i. requires the defendant to do what he/she is contractually obligated to do
ii. Used for unique subject matter
b. Injunction
i. a court order directing a party to do or to refrain from doing something
c. Rescission
i. the court cancels the agreement and returns the consideration exchanged to each respective party
106
Third Party Rights: Beneficiaries
i. General rule: Third parties cannot enforce a contract
ii. Exception to the general rule if the parties to the contract intended to benefit the third party
107
EX of Beneficiaries
a. Creditor Beneficiaries
i. Creditor Beneficiary can enforce the contract against Promisor OR Promisee
b. Donee Beneficiaries
i. Donee Beneficiary CAN enforce the contract against Promisor
ii. Donee Beneficiary CAN’T sue the Promisee
108
Incidental Beneficiary
a 3rd party who unintentionally benefits from a contract
109
Assignment
Transfer of contractual rights
110
Delegation
Transfer of contractual duties
111
Novation
i. A novation is a 3 (or more) party contract?
ii. The original contracting parties agree to relieve the obligor from liability by substituting another in the place of this party
112
Tort
a. A civil wrong that gives rise to an injury or harm (other than a breach of contract)
b. Tort law limits how people act and use their resources
113
Types of Torts
a. Intentional
b. Negligence
c. Strict Liability
114
Intentional Torts
a. Deliberate actions that cause injury or harm
* The plaintiff has to prove that the defendant intended to perform the act that caused the harm
ii. Note: The plaintiff does not have to prove that the defendant intended to cause the exact harm suffered but only that the defendant intended the ACT that was substantially to result in harm.
115
Intent
the desire to being about certain results
*The plaintiff has to prove that the defendant intended to perform the act that caused the harm
116
Intentional Tort: Assault
Placing another in immediate apprehension for his/her physical safety
117
Intentional Tort: Battery
Touching of another without consent
Additional Battery Elements: Did defendant touch plaintiff? Was it intended? Was it done in a manner that was harmful or offensive?
118
Intentional Tort: Infliction of Emotional Distress
1. Outrageous, intentional conduct that carries a strong probability of causing mental distress to the person at whom it is directed
2. Infliction of emotional distress requires the plaintiff to prove not only mental distress, but also physical symptoms
Ex: Employee who have been discriminated against or fired, efforts of creditors to get payment, parent seeing their child ran over by a truck
119
Intentional Tort: Invasion of Privacy
1. Using a person’s name or likeness for personal gain/use.
EX: need permission to use someone's name or picture
2. Intrusion upon a person’s solitude
EX: conducted illegal search, illegally searching your home
3. Public disclose of highly objectionable private information
EX: Broadcasting to the world if I haven’t paid my bills
120
Intentional Tort: False Imprisonment
Intentional unjustified confinement of a nonconsenting person
EX: Manager blocked room with chair with employee in it, Towing company towed a car with person in car
121
Intentional Tort: Malicious Prosecution (False Arrest)
Causing someone to be arrested criminally without proper grounds
Ex: false arrest
122
Intentional Torts: Trespass to Chattell
AKA Trespass to personal property
When someone uses personal property without permission or otherwise interferse with the owner’s possession of personal property
- Can recover the value of the lost use of the item and recover the item itself
123
Defamation
Publication of untrue statements about another that hold up that individual’s characters or reputation to ridicule
124
Slander
Oral Defamation
125
Libel
Written Defamation
126
What are the defenses to Defamation?
Truth and Priviledge Communicaton
127
Is the News Media held to the same standard?
No, because of the 1st amendment when it comes to public officials unless if they publish with no regard for the truth
128
Intentional Torts: Fraud
Intentional misrepresentation of a material fact that is relied upon by someone to his or her injury
2. Failure to disclose can also constitute fraud
a. There must be a legal duty to disclose a fact
3. Intentional concealment of an important fact that induced reliance can be fraud
4. Business frauds often involve the intentional misrepresentation of property or financial status
Fraud is both a tort and a crime!
129
Intentional Tort: Injurious Falsehood
1. Publication of untrue statements that disparage the business owner’s product or its quality
2. Similar to defamation BUT usually applies to a product rather than character or reputation
3. Plaintiff must:
a. Establish the falsity of the Defendant’s claims
b. Show actual damage arising from the untrue statements
130
Intentional Tort: Tortious Interference
1. Wrongful interference with contractual or business relationships
Ex: One company going after another company’s employees while that employee is under contract.
a.In this case, you are not allowed to induce the employee to break their contract
131
What is Negligence?
Definition: Unreasonable behavior that causes injury
ii. Considered an unintentional tort
iii. Number 1 cause of action for lawsuits in the US
132
Elements of Negligence
i. Duty of Care
ii. Breach of Duty
iii. Causation in Fact
iv. Proximate Causation
v. Actual Injury
133
Element of Negligence: Duty of Care
Definition: A responsibility to another person to exercise reasonable care and skill to avoid causing injury or harm
ii. Without a duty to another person, one does not owe that person reasonable care
iii. Usually stems from a person’s conduct or activity
b. Standard of Care:
i. Ask yourself: What would a reasonable person do under the same or similar circumstances?
ii. Example: Driving a car Not texting and driving, No drinking and driving
c. Is there a Duty owed for non-conduct?
i. Answer: There’s no duty owed to somone through non-conduct
ii. Example: No duty to worn others of danger
iii. Exceptions: Moral responability vs legal duty, feel a moral obligation but don’t have to
1. Special Relationships:
a. Creates a Duty to take action and makes someone liable for their unreasonable non-conduct
b. Examples:
iv. Other Examples: Parent/Child, Business/Customers
1. Businesses being sued for non conduct/ not protecting customers from crimes has increased.
a. Examples:
i. Gabby Petito: Couple Road trup, people see them fighting and call it in, police don’t arrest them and Gabby ends up dead, if he had arrested, she might be alibe
ii. Iannelli v. Burger King Corp takeaway: Teenager made a fuss in BK Infront of father with his kids, teens beat father up. Normally, business don’t have to protect customers but in that case there were warning signs so BK did have a duty to protect
KEY QUESTION: Were the restaurant employees aware of the danger? If yes, they have a duty to protect injury
d. Is the Standard of Reasonableness the Same for Everyone?
i. In most negligence cases the standard of reasonableness is that of a reasonable person
ii. What is the Standard of Reasonableness for Professionals:
1. The standard is that of a reasonable professional
2. Negligence of a professional is called Malpractice
134
Mailbox Rule
Acceptance becomes legally binding when the offeree dispatches it
135
What about an Offeror’s Revocation?
a. If an offer is in the mail and you put revocations in the mail, it can’t be revoked since the offer is already accepted
b. The offer is accepted as soon as it goes in the mail
136
Consideration
1. Bargain for Exchange: An agreement where each party gives something to the other
2. Exchange of Value: Any value exchanged between parties is legally adequate, even if it doesn’t match fair market value.
3. Benefit and Detriment: One party benefits while the other incurs a detriment through the exchange.
4. Examples of Consideration:
- Promise to pay: An agreement to pay money.
- Promise to deliver goods or services.
- Agreement not to sue: Accepting payment in exchange for not pursuing legal action.
- Promise to keep an offer open (option contract): A binding promise to hold an offer open for a period, supported by the offeree's consideration (often seen in real estate).
- Promise to do something optional: A commitment to perform an act that isn’t required.
- Promise to refrain from legal rights: Example, paying someone to stop a disruptive action.
- Unilateral contracts: A performance in exchange for an offer where the other party has no obligation to act.
137
What Doesn’t Suffice as Consideration?
Pre-existing Consideration, Past Consideration, Promise to make a gift
138
Exception to the Consideration Requirement
Promissory Estoppel is a legal principle allowing enforcement of a promise even without consideration if certain conditions are met:
1. Reasonable Reliance: A party who reasonably relies on a gratuitous promise can seek compensation for that reliance.
2. Economic Detriment: It applies when a party justifiably relies on a promise to their economic detriment, even if there is no formal contract.
3. Contract Validity: Promissory estoppel can make a contract enforceable despite the lack of consideration.
4. Key Elements:
-The promisor made a promise substantial enough to cause action.
- The promisee relied on the promise.
- The promisee suffered a significant detriment as a result.
- Relief comes by enforcing the promisor to fulfill the promise.
139
Capacity of Parties to Contract
Capacity of Parties to Contract refers to a person's legal ability to be bound by a contract. Key points include:
1. Minors: Contracts with minors are voidable at the minor’s option, meaning they can choose to enforce or cancel the contract.
Exception: Contracts for necessaries like food, clothing, shelter, and medical care are enforceable.
A minor’s ability to void a contract generally ends at age 18.
2. Intoxicated or Mentally Impaired Persons: These individuals cannot be bound by contracts, and any contracts they enter are voidable at their option.
3. Court's Competence Test: Courts determine if an adult was capable of understanding the nature and purpose of the contract at the time of agreement.
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