1) What is the promise to be enforced? (offer) 2) What is the Act or promise sought in return? (acceptance) 3) What the Act or promise bargained for? (before) 4) Does the Act or promise have legal value? (value)
1) court will look at adequacy of consideration when you are dealing with fungible goods (easily exchangeable goods) where its money for money. (fungible for fungible). 2) before declaring specific performance (in equity). Specific performance is an equitable remedy, where your in court and claim you’ve been wronged and wants to enforce the contract the way it was supposed to be enforced. i. Overview - Adequacy of consideration relates to whether the bargain involves an exchange of equal value. Generally, however, courts do not concern themselves with whether consideration is adequate, honoring the concept of freedom of contract. On the other hand, courts do require consideration to be "sufficient", which relates to whether there is a legal detriment incurred as part of a bargained exchange of promises or performances. - If a bargain gives a party a choice of alternative obligations, each alternative on its own must constitute sufficient consideration for the return promise. - Sufficient consideration: Refers to value the law will enforce. - Sufficient – think “value”. - Adequacy – think “quantity”. - Rule: If a person gives up a right that is valuable to them (forbearance) in a bargained for exchange then there is consideration, regardless of whether the promisor benefits or not - Rule: The court will inquire regarding sufficiency, but it will not generally inquire regarding adequacy of consideration. If the court finds the exchange to have no legal value (sufficiency), there is no consideration (ie. obvious ideas, love and affection, when a nominal amount is “exchanged” for larger sum or for an item with a fair market value far in excess of amount given (disguised gift). The court will inquire into adequacy if it’s merely an exchange of money or fungible goods. - Fungible goods (same stuff) (gas, grain, etc.). Test for Fungible Goods: throw it in a big pot. If you don’t care that you get a specific one back, then you are talking about fungible goods. 27
- Adequate consideration: Refers to the quantity of the amounts exchanged. (Compare this to that) Normally, courts do not inquire into the adequacy of consideration.
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- Fall '06
- The Land, Offeree, Lucy v Zehmer