Kubasek Dynamic Business Law CH 9: Consideration – Flashcards
Unlock all answers in this set
Unlock answersquestion
consideration
answer
what a person will receive in return for performing a contract obligation, the bargained-for exchange
question
Rule: For a promise to be enforced by the courts, there must be...
answer
... consideration.
question
benefit to the promisor
answer
example of consideration, e.g. employer benefits from an employee promising to stay in a job until it is complete
question
detriment to the promisee
answer
example of consideration, e.g. athlete promises his coach to refrain from riding his prized motorcycle
question
promise to do something
answer
example of consideration, e.g. roommate promises to cook dinner for 6 mos
question
promise to refrain from doing something
answer
example of consideration, e.g. student promises to stop drinking alcohol during exam week
question
bilateral contract
answer
a promise exchanged for a promise
question
unilateral contract
answer
a promise exchanged for a completed act
question
promissory estoppel
answer
legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract
question
three conditions of promissory estoppel
answer
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
question
Does the court take into account adequacy of consideration?
answer
Rarely. Even if the exchange is unfair, both parties bear the responsibility of research.
question
exception to adequacy of consideration
answer
If one party "sells" his assets at artificially cheap prices to avoid creditors.
question
illusory promise
answer
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."
question
Is an illusory promise consideration?
answer
No. It is not actually a promise and therefore not consideration.
question
Does past consideration count?
answer
No. Work done in the past has already been performed and cannot be given in exchange.
question
Is preexisting duty valid consideration?
answer
No. Performance you are already obligated to do (by law or by contract) is expected and cannot be given in exchange.
question
unforeseen circumstances
answer
An exception to preexisting duty, events that a reasonable person would not be expected to anticipate
question
Does an agreement modifying a contract need consideration to be binding?
answer
According to UCC Article 2, no. Given that the modification is not a material shift, no new exchange is necessary.
question
liquidated debt
answer
debt without dispute over the fact that money is owed or the amount owed
question
unliquidated debt
answer
debt for which the fact that money is owed or the amount is disputed
question
Which type of debt allows partial payment to count as consideration?
answer
unliquidated debt, i.e. if debtor and creditor do not agree on the amount owed, creditor can accept less than full payment
question
accord and satisfaction
answer
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
question
another way to express accord + satisfaction
answer
new agreement + performance or payment
