PowerPoint 5 Flashcards by Jonathan Kikuchi

Consideration needs to be ___, not ___.

Sufficient, adequate.

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Forbearance to Sue

Give up right of action.

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Past Consideration

Consideration given before contract contemplated.

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Why would you charge someone a dollar for a car instead of giving it to them?

To get around a consideration issue. If you give it away for free, it is not binding and has no consideration.

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Can consideration be something of very minor value (a pin, a ribbon, etc.)?

Yes.

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Is giving labour or services sufficient consideration?

Yes.

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Is the value of friendship sufficient consideration?

No.

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Situations involving pre-existing obligations:

Pre-existing public duty.
Pre-existing obligation owed to third party.
Pre-existing obligation owed to same party.

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When would forbearance to sue be used?

If someone can’t pay agreed amount on contract, bank might give up their right to action to collect from them by giving them 6 more months of extra time.
Catching a shoplifter. Tell them to give $500 and they won’t call police.

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Forbearance to sue is only valid when…

They have legal right to do it in the first place. For example, if the shoplifter is a kid, they can’t sue the parents for vicarious liability.

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I gave you a computer in the past, and I argue that that is consideration. Is this valid?

No, consideration needs to be fresh. Can’t say I gave you computer in the past, since that contract is already done.

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Pre-Existing Public Duty

Promise to perform pre-existing public duty. For example, public officer promises to perform for extra pay. Police says “I’ll investigate if you promise to pay $500.”

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Why is there no consideration in pre-existing public duty?

Public official gives nothing new.
Police already obligated to investigate.
Against policy to enforce agreement.
Avoid incentive for police to misbehave.

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Pre-Existing Obligation owed to Third Party

Promise to perform duty owed to third party. Old contract promise repeated for new contract. “I’ll perform contract with X if you pay me $500.”

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Pre-Existing Obligation owed to Same Party

Promise to perform obligation owed to same party. Old contractual promise repeated for new contract. “I’ll perform our contract if you pay me $500 extra.”

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Why is there no consideration in pre-existing obligation owed to same party?

No new benefit for same party.
You already have the right to enforce my performance.
Against policy to enforce agreement.
Avoid incentive to threaten breach to get extra pay.

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In general, a promise is ___ without consideration.

Unenforceable.

What are exceptions to the general rule that a promise is unenforceable without consideration?

Seal and promissory estoppel.

You sell a car for $1. Does it meet the criteria of consideration?

Yes, because even though it is not adequate, it is sufficient.

Does the law recognize gifts?

No.

If you gave something for free, it would not be a valid transfer. It lacks ___ so it is not binding.

Consideration.

What is the law’s way of giving something for free?

Selling it for $1, $0.01, or even a grain of salt.

You pledge to a charity that you will give 5 million dollars. They give you a pin in return. Is this sufficient for consideration?

Yes.

Consideration must be sufficient. What is something that you can “give” that is considered insufficient consideration?

Friendship.

Is labour and services considered sufficient for consideration?

Yes.

When is forbearance to sue most often used?

When a person has a mortgage from a bank, but has troubles paying and tells the bank. The bank negotiates and gives up the right to collect for 6 months.

A young teenager shoplifts, and gets caught. The storeowner says that they won't call the police if the parents give them $500 because they are vicariously liable. Does forbearance to sue apply?

No, this is bribery or a form of extortion. Store could not argue forbearance to sue, since the parents were not vicariously liable for their son (no parent-child vicarious liability).

Past consideration says that consideration needs to be new at the time...

The contract is created.

Employer told their employees that if they stopped smoking, they would get $1000 at the end of the year. Almost all the workers said they were smokers. Is this a valid consideration?

Yes, because all the workers had the right to smoke.

People want police to watch their neighbourhood more closely. Is this proper consideration?

No, because police gives nothing new. They are already supposed to be doing their job. However, if they are doing it off duty, then this is new and not pre-existing.

Is there sufficient consideration in a a pre-existing obligation owed to a third party?

Yes.

Beyonce is giving Rexall the right to sell tickets to the show and she performs the concert. The TV company also wants to film the show, and approaches Beyonce and she has to perform the concert. Is this sufficient consideration?

Yes, it is a pre-existing consideration owed to a third party. There is benefit for the new party under the new contract, since the new party acquires the right to enforce the performance.

A contractor is renovating your kitchen. Partway through, he says that he will need an extra $2000 in order to compete the job on time. You say that this is not a problem. Are you required to pay that contractor the extra $2000?

No, there is no consideration. There is no new benefit for you. However, if the contractor says he will get the job done a day earlier, or he gets you flowers, there is consideration, and you must pay that extra $2000.

Estoppel

Stops someone from failing to live up to their promise.

Estoppel must be used as a ___, not a ___.

Shield, sword.

Landlord says in post war period that family only needs to pay 50% of rent. However, landlord finds out that the family was not affected, and is doing well. Landlord raises rent and sues, and tries to get retroactive lost rent. Usually this would work in landlord’s favour because he didn't get anything in exchange for his promise. However, how would estoppel be applied?

If the family can show reliance on this promise (such as the money was put in a college fund).

Estoppel is an equitable exception to...

Pre-existing obligation owed to the same party, where there is no consideration.

A contractor wants to sue you to pay an extra $2000 for a job that he did, and is using estoppel as his argument (he relied on your promise of the extra $2000). Is this a valid argument?

No, as estoppel can only be used as a defence and not an attack.

Seal

A special mark on a document that must be applied when a contract is signed. It does not need to take any particular form. It symbolizes the seriousness of the promise.

If there is a seal on a document, it allows promises to be enforceable even if...

There is no consideration.

With a seal, a party agrees to give something for ___.

Nothing.

Someone wants a car loan, but doesn't have a lot of money. A friend co-signs for them, and the money is handed over. Does this co-signing have consideration?

No, but it does not need to. All co-signing agreements are always under seal so they don't need to give consideration to the co-signer.