Chapter 13

Question 1

Consideration

Answer 1

The value given in return for a promise or a performance. It must be present to make the contract legally binding

Question 2

Elements of consideration

Answer 2

1. Something of legally sufficient value must be given in exchange for the promise
2. There must be a bargained for exchange

Question 3

legally sufficient value

Answer 3

1. A promise to do something that one has no prior legal duty to do
   2 the performance of an action that one is otherwise not obligated to do
2. Forbearance

Question 4

Forbearance

Answer 4

The act of refraining from exercising a legal right.

Question 5

Does something need to be of direct economic or financial value to be legally sufficient consideration?

Answer 5

No

Question 6

How do courts decide what something is worth (freedom of contract)

Answer 6

It’s up to the parties

Question 7

Agreements that lack consideration

Answer 7

Preexisting duty
Unforeseen difficulties
Rescission and new contract
Past consideration

Question 8

Rescission

Answer 8

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by their conduct, or by court decree

Question 9

Past consideration

Answer 9

Something given or some act done in the past which cannot ordinarily be consideration for a later bargain

Question 10

Illusory promises

Answer 10

When it fails To bind the promisor

- unenforceable

Question 11

Accord and satisfaction

Answer 11

An agreement for payment (or performance) between two parties, one of whom has a right of action against the other. After the payment has been accepted it is complete and the obligation is discharged

Question 12

Liquidated debt

Answer 12

A debt that is due and certain in amount

Question 13

Unliquidated debt

Answer 13

A debt that is uncertain in amount

Question 14

Release

Answer 14

A contract in which one party forfeits the right to pursue a legal claim against the other party

Question 15

Releases are binding if

Answer 15

1. The agreement is made in good faith (honesty)
2. The contract is in a signed writing
3. The contract is accompanied by consideration

Question 16

Covenant not to sue

Answer 16

An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim

Question 17

Exceptions to the consideration requirement

Answer 17

1. Promises that induce detrimental reliance
2. Promises to pay debts that are barred by a statute of limitations
3. Promises to make charitable contributions

Question 18

Promissory estoppel

Answer 18

A doctrine that applies when a promisor makes a clear and definite promise in which the promisee justifiably relies; such a promise is binding if justice will be better served by the enforcement of the promise.

Question 19

For the promissory estoppel to be applied:

Answer 19

1. Must be a clear and definite promise
2. Promisor should have expected that the promisee would rely on the promise
3. Promisee reasonably relied on the promise by acting or refraining from some act
4. Promisee’s reliance was definite and resulted in substantial detriment
5. Enforcement of the promise is necessary to avoid injustice

Question 20

Estopped

Answer 20

Barred, impeded or precluded (prevented)