Chapter 13: Contracts – ConsiderationNo cause of action arises from a bare promise.---Legal Maxim•§1: Elements of Consideration•Generally, consideration must have:•“Legally Sufficient Value” and•a “Bargained-for-Exchange.” con-sid-er-a-tion(kun sid a ra shun) n. 1. the act or process of considering: deliberation; meditation. 2. A circumstance to be considered; a factor in forming a judgment or decision. 3. Thoughtfulness; solicitude. 4. A thought produced by considering; a thoughtful opinion. 5. Something given in exchange for a service rendered; a recompense. 6. Law. Something promised, given or done that has the effect of making an agreement a legally enforceable contract. 7. High regard.•First element, “legal value”:•Value•Promise,•Performance, or•Forbearance.•CASE 13.1 Hamer v. Sidway (1891).•Second element, bargained-for-exchange:•Must provide basis for the bargain.•Both parties must be able to say “yes” or “no”.•Something of legal value must be exchanged between the parties. Key point: Both parties must get andgive consideration. Why?§2: Adequacy of Consideration•General Rule.•Courts Typically Will Not Consider Adequacy of Consideration. Why? Value?•In general, the law does not protect a person from entering into an unwise contract. Why?•Rarely, courts may look at the contract, if there is a large “shockingly inadequate” disparity in the amount consideration exchanged. Is there really “consent?” Bible Seller example.•§3: Agreements That Lack Consideration•Preexisting Duty.•Promise to do what one alreadyhas a legal duty to do does not constitute legally sufficient consideration. •Exceptions.•Unforeseeable Difficulties. •Recission and New Contract.•Past Considerationis no consideration because the bargained-for exchange element is missing.•Illusory Promises.•Promisor has not definitely promised to do anything (no promise at all).•Gift Promises§4: Settlement of Claims•Accord and Satisfaction.•Debtor offers to pay a lesser amount than the creditor purports to be owed.
•The debt (amount owed) must be in dispute.•The Accordis the new agreement•The Satisfactionoccurs when the new agreement is completed. (Release)•§5: Exceptions to the Consideration Requirement•Promissory Estoppel (detrimental reliance): recovery if reliance on promise of another.•Requirements to State a Claim:•Must be definite promise.•Promisee must justifiably rely on the promise.•Reliance is substantial.•Justice will be served by enforcing promise.•Promises to Pay DebtsBarred by Statute of Limitations.•A promise by a debtor to pay a previous debt barred by the statute of limitations is enforceable – no additional consideration is necessary.