BLS 342- Exam #3 Notes (Hannah H)

BLS 342- Exam #3 Notes (Hannah H) - Chapter 15...

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Chapter 15 Consideration Consideration is what a person will receive in return for performing a contract obligation. Rules of consideration Lack of consideration o A court will only enforce a contract if the other party promised something in exchange. o Exception: Promissory Estoppel Occurs when one party makes a promise knowing the other party will rely on it, the other party does rely on it and the only way to avoid injustice is to enforce the promise. Usually can recover “reliance damages” (Money she spent in reliance on the job offer Adequacy of consideration o The court doesn’t weigh whether you make a good bargain. o Exception : if it appears that the sale of the assets was done to avoid payment to creditors, the court may set aside each sale & sell the assets to pay the creditors. Illusory Promise o It is not a promise, therefore it is NOT consideration o Example: Shawn offers to sell Molly skis for $300. Molly responds, “I’ll look at them in the morning, and if I like them, I’ll pay you.” Molly hasn’t committed to doing anything: No consideration Past Consideration o For a promise to be enforceable, there must be bargaining and an exchange. A promise cannot be based on consideration that was provided before the promise was made. o Exception: Restatement (Second) of Contracts (Persuasive, though not binding, authority) Promises based on past consideration maybe enforceable “to the extent necessary to avoid injustice” Preexisting Duty o 1) Performance of a duty you are obligated to do under law is not good consideration. o 2) Performance of an existing contractual duty is not good consideration. o Exceptions: Unforeseen Circumstances: The promise is valid if neither parties knew of the necessary additional consideration Additional Work: More work than is obligated under the contract, the promise is valid consideration The Uniform Commercial Code (UCC) Article 2 (Sale of goods): An agreement modifying a contract needs no consideration to be binding Uniform Commercial Code: Requirement and Output Contracts
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A requirement contract: An agreement where the buyer agrees to purchase all his goods from one seller o Under common law this contract would be void, because the buyer has made no commitment so there is no consideration Output Contract: seller guarantees to sell everything she produces to one customer. Contracts are valued by merchants so under UCC they are valid with limitations that the requirement or output is in “good faith” Partial Payment of Debt? (Look on BLS Study guide settlement of debt) Chapter 16 Capacity and Legality Legality of purpose Sometimes courts will intervene on the side of the unknowing party and provide some type of remedy for a person not at fault, who happens to find themselves in an illegal bargain Courts can reform illegal contracts to make them legal and enforceable. Violation of Statutes
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This note was uploaded on 11/15/2011 for the course BLS 342 taught by Professor Miller during the Fall '08 term at Miami University.

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BLS 342- Exam #3 Notes (Hannah H) - Chapter 15...

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