Consideration

Question 1

What are the elements of a consideration?

Answer 1

1.) There must be a bargained-for exchange between parties (if a party intends to make a gift, he or she is not bargaining) and 2.) What is bargained for must have legal value.

Question 2

List the types of contracts with uncertainty of total performance

Answer 2

1. ) Requirements Contracts

2. ) Output Contracts

Question 3

Explain the difference between a liquidated debt and an unliquidated debt

Answer 3

1.) Liquidated is one in which the amount due is agreed upon

.) Unliquidated is one in which the parties acknowledge a debt but disagree as to the amount that is due

Question 4

Describe the requirement for an output contract to be with consideration

Answer 4

The contract is based on established production or ability to produce by the seller and the seller must sell its production to the buyer

Question 5

Define “Accord and Satisfaction”

Answer 5

Agreement between two parties to settle an unliquidated debt (obligation is acknowledged but the amount is unclear)(accord); satisfaction is payment of that amount; payment discharged all obligations; is not effective for discharging a liquidated debt, such as an installment loan

Question 6

What are the requirements for a consideration in a contract?

Answer 6

Each party to the contract has a benefit and a detriment. The promises (detriment) are induced by the benefits and the benefits are induced by the promises (detriment). Bargained-for exchange. Consideration must actually change hands.

Question 7

What promises are enforceable without consideration?

Answer 7

1. ) Good-faith modification under the UCC
2. ) Charitable Subscriptions
3. )Promises barred by the statute of limitations (4 years usually)

Question 8

How does an individual incur legal detriment?

Answer 8

1. ) Doing or promising to do something that he had no prior legal duty to do
2. ) Refraining from or promising to refrain from doing something that he had no prior legal duty to refrain from doing

Question 9

Define “preexisting duty”

Answer 9

A promise to do what one is already legally obligated to do is without consideration

Question 10

List the exceptions to a preexisting duty

Answer 10

1. ) Rescission and new contract
2. ) Unforeseen Hardship
3. ) Sale of goods - Modification of contract

Question 11

How is consideration defined?

Answer 11

Doing what you’re free not to do or not doing what you’re free to do

Question 12

Are charitable subscriptions enforceable as consideration?

Answer 12

Yes even though there is no detriment for one side