BUS311_chapter_04

Since theo has a right to bring a lawsuit his release

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Unformatted text preview: e) form, as when someone gives up something he has a legal right to do. Example 4.24. Jenny accidentally hits Theo with her car. Jenny’s insurance company offers Theo $15,000 in compensation for his injuries, but in exchange he must sign a full release. Here, the consideration to Theo is the promise to give him $15,000. If Theo accepts, his consideration to the insurance company is his giving up his right to sue based on the accident. Since Theo has a right to bring a lawsuit, his release is consideration to the insurance company, and they have a binding contract. But if Jared, a business law student, threatens to sue Aaron on grounds that Aaron’s personality constitutes Intentional Infliction of Obnoxiousness, and only agrees to drop the case if Aaron will promise to pay him $500, Jared’s forbearance from suing is not consideration. Jared did not in good faith believe he had a right to sue. So Aaron is not bound to pay the money. rog80328_04_c04_062-088.indd 78 10/26/12 5:42 PM Section 4.4 Consideration CHAPTER 4 It is important to focus on the idea that a contract involves an exchange to understand the concept of consideration. Suppose Maya, who is cleaning out her garage, says to Josh, “I offer you this bike.” Josh replies, “Great! I accept.” Maya then changes her mind and decides to sell the bike on Craigslist. Can Josh sue for breach successfully? Josh thinks there is an offer and acceptance, after all. But alas for his case, there is no consideration. While Maya did promise him the bike, he gave nothing in return. Thus Maya’s promise is merely an unenforceable gift promise. Courts generally are not concerned with whether consideration is of equal value, or whether the parties have made a good bargain. If you truly wish to sell your Mercedes for $10, you may do so! Sometimes nominal consideration such as this is used to turn what might otherwise be a gift into a contract, but as long as there is no fraud, duress, or undue influence, the contract is valid. What Isn’t Consideration? To have a contract, we see th...
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This test prep was uploaded on 04/09/2014 for the course BUS 311 taught by Professor Parker during the Spring '10 term at Ashford University.

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