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Consideration Chapter Introduction 12-1 Elements of Consideration 12-1a Legal Value 12-1b Bargained-for Exchange 12-2 Adequacy of Consideration 12-2a Courts Typically Will Not Consider Adequacy 12-2b Evidence of Grossly Inadequate Consideration 12-3 Agreements That Lack Consideration 12-3a Preexisting Duty 12-3b Past Consideration 12-3c Illusory Promises 12-4 Settlement of Claims 12-4a Accord and Satisfaction 12-4b Release 12-4c Covenant Not to Sue 12-5 Exceptions to the Consideration Requirement 12-5a Promissory Estoppel 12-5b Promises to Pay Debts Barred by a Statute of Limitations 12-5c Charitable Subscriptions Chapter Recap Page 1 of 19 Print Chapter 2010-8-30 http://atext.aplia.com/controller/ChapterPrint.aspx?isbn=0324655223&mod=0&ch=12... Chapter Introduction The fact that a promise has been made does not mean the promise can or will be enforced. Under Roman law, a promise was not enforceable without some sort of causa that is, a reason for making the promise that was also deemed to be a sufficient reason for enforcing it. Under the common law, a primary basis for the enforcement of promises is consideration. Consideration is usually defined as the value (such as cash) given in return for a promise (such as the promise to sell a stamp collection on receipt of payment) or in return for a performance. Page 2 of 19 Print Chapter 2010-8-30 http://atext.aplia.com/controller/ChapterPrint.aspx?isbn=0324655223&mod=0&ch=12... 12-1 12-1a Elements of Consideration Ask the Instructor Video: Agreement and Consideration: What is consideration? Legal Value Case 12.1: Hamer v. Sidway Court of Appeals of New York, Second Division, 1891. 124 N.Y. 538, 27 N.E. 256. Often, consideration is broken down into two parts: (1) something of legally sufficient value must be given in exchange for the promise; and (2) usually, there must be a bargained-for exchange. The "something of legally sufficient value" may consist of (1) a promise to do something that one has no prior legal duty to do, (2) the performance of an action that one is otherwise not obligated to undertake, or (3) the refraining from an action that one has a legal right to undertake (called a forbearance ). Consideration in bilateral contracts normally consists of a promise in return for a promise, as explained in Chapter 10. For example, suppose that in a contract for the sale of goods, the seller promises to ship specific goods to the buyer, and the buyer promises to pay for those goods when they are received. Each of these promises constitutes consideration for the contract. In contrast, unilateral contracts involve a promise in return for a performance. Suppose that Anita says to her neighbor, "When you finish painting the garage, I will pay you $100." Anita's neighbor paints the garage. The act of painting the garage is the consideration that creates Anita's contractual obligation to pay her neighbor $100. ... View Full Document

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