Chapter 13 - Chapter 13 Contracts Consideration No cause of...

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Chapter 13: Contracts – Consideration No 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 and give 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 already has a legal duty to do does not constitute legally sufficient consideration. Exceptions. Unforeseeable Difficulties. Recission and New Contract. Past Consideration is 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 Accord is the new agreement The Satisfaction occurs 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 Debts Barred 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.

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