Kubasek Dynamic Business Law CH 9: Consideration – Flashcards
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promise to do something
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example of consideration, e.g. roommate promises to cook dinner for 6 mos
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promise to refrain from doing something
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example of consideration, e.g. student promises to stop drinking alcohol during exam week
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bilateral contract
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a promise exchanged for a promise
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unilateral contract
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a promise exchanged for a completed act
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promissory estoppel
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legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract
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three conditions of promissory estoppel
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1. party A makes a promise knowing party B will rely on it 2. party B does rely on the promise 3. to avoid injustice, the promise must be enforced
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Does the court take into account adequacy of consideration?
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Rarely. Even if the exchange is unfair, both parties bear the responsibility of research.
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exception to adequacy of consideration
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If one party "sells" his assets at artificially cheap prices to avoid creditors.
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illusory promise
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Party A appears to commit to something but really has not, e.g. "I'll take a look at them and if I like them, I'll pay you."
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Is an illusory promise consideration?
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No. It is not actually a promise and therefore not consideration.
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Does past consideration count?
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No. Work done in the past has already been performed and cannot be given in exchange.
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Is preexisting duty valid consideration?
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No. Performance you are already obligated to do (by law or by contract) is expected and cannot be given in exchange.
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unforeseen circumstances
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An exception to preexisting duty, events that a reasonable person would not be expected to anticipate
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Does an agreement modifying a contract need consideration to be binding?
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According to UCC Article 2, no. Given that the modification is not a material shift, no new exchange is necessary.
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liquidated debt
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debt without dispute over the fact that money is owed or the amount owed
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unliquidated debt
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debt for which the fact that money is owed or the amount is disputed
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Which type of debt allows partial payment to count as consideration?
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unliquidated debt, i.e. if debtor and creditor do not agree on the amount owed, creditor can accept less than full payment
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accord and satisfaction
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arrangement between contracting parties whereby party A substitutes different performance for his original duty under the contract, e.g. partial payment of disputed credit card debt
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another way to express accord + satisfaction
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new agreement + performance or payment
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