Flashcards in Page 13 Deck (23):
If a creditor agrees to less than the payment required plus the debtor promises not to file bankruptcy, is that enforceable?
Yes, because the debtor has forgone his legal right to file bankruptcy, which is consideration
If a creditor gives a written release for a debt, what does that do?
Releases the obligation
What is an executory contract?
One involving ongoing periodic payments
If a debtor gives a check in full payment that is less than agreed, what are the different viewpoints on this?
- CL: cashing check is accord/satisfaction and discharges entire debt if good faith dispute about amount and creditor had reasonable notice it was full payment
- UCC: if cashed, entire claim is discharged if tendered in good faith with accompanying conspicuous statement it was in full satisfaction, and amount is unliquidated or subject to a Bona fide dispute
What are exceptions to cashing a check that claims to be full payment but isn't?
- it doesn't discharge the debt if the creditor is an organization
- or if before check was tendered, creditor sent a statement that payment must be sent to specific place/person and check wasn't sent there
- if creditor doesn't know check is tendered in full satisfaction
- or if creditor sends check back within 90 days of payments
Agreeing to pay more for the same performance is usually not enforceable because why?
What are the exceptions to agreeing to pay more for the same performance not being consideration?
- promise is similar but different
- The pre-existing duty was owed to someone other then the person that the new promises made to
- unanticipated circumstances
If there is an agreement to build a house for $200,000 with pine doors, then it is modified to pay $230,000 with red wood doors, is that OK?
Yes, because the promise is similar but different, so there is consideration (diff doors) for more money
What is the best way to avoid illusory promises?
Insert a requirement of good faith or reasonableness into the agreement
It is in aleatory promise?
Conditional on the happening of a fortuitous event not within the promior's control
If you make a conditional promise to buy a house contingent on getting approval for a loan, what have you impliedly promised?
To use reasonable efforts to get the loan
If you promise to pay an old debt, what does that do to the statute of limitations?
Starts it anew
What kinds of contracts are voidable?
Those involving duress, mistake, fraud, infancy
The interpretation of an expression involved in making a contract is at issue, what kind of interpretation should be given?
Objective - what a reasonable person in that person's shoes, knowing all the addressee knows, would have interpreted it to mean
What is the peerless rule?
If an expression could have two equally reasonable meanings, and each person understands it differently, but equally reasonably, no contract is formed
What is the case that the peerless rule comes from?
Two ships peerless leaving at different times
If a contact was interpreted the same subjective way by both parties, but that wasn't the meaning that was intended, what happens?
The meaning the parties thought will govern, even if it wasn't reasonable
One party knows that another party has a different interpretation of the contract, what happens?
The meaning of the other party prevails, even if the first party's was more reasonable
What is consideration?
The thing you're promising (money, an act, forbearance)
What are three ways that a promise could fail on the consideration component?
- Bargain was just nominal
- promise was illusory
- promisor was legally obligated to do the promise anyway
What Are the three tests of consideration?
- must induce a current exchange of performance
- must cause legal detriment to the promisor
- must have a binding obligation associated with it
What is legal detriment?
Refraining from doing something you have a right to do, or doing something you don't have a legal duty to do