Consideration

Question 1

Consideration

Answer 1

A promise is unenforceanle unless it is supported by consideration

Without consideration the transaction is a gratuitous promise, which is generally unenforceable

Question 2

What is consideration?

Answer 2

A bargain

or

bargained-for exchange

Question 3

Forms of Consideration

Answer 3

1. Return promise to do somehting
2. Return promise to refrain from doing something
3. Actually doing some act
4. Refraining from doing some act

Question 4

Elements of Consideration

Answer 4

1. Legal detriment (PA follows legal detriment)
2. Bargained for exchange

Question 5

What is Failure of Consideration

Answer 5

A claim that the party has not performed in accordance with his promise

Question 6

Bargained-For Consideration

Minority test

Answer 6

Benefit/Detriment Analysis

Test: Whether there is a benefit to promisor OR detriment to promisee

Question 7

Legal Detriment Test (PA follows)

Answer 7

whether the promisee is doing something he had a legal right not to do or is forgoing some activity in which he had a legal right to engage.

Question 8

When does insufficient consideration occur?

Answer 8

It occurs when:

• the promise is not supported by consideration

OR

• the consideration is legally insufficient

*Modern RULE: supposed inadequancy of consideration is not defencse to a breach of contract claim

Question 9

Failure of Consideration

Answer 9

Is a claim that the party has not performed in accordance with his promise

Question 10

Insuffient Consideration (PA)

Answer 10

A promise without consideration are binding and enforceable if:

• the promise is in an expression written statment,
• is signed by the party to be charged, and
• the signer intended it to be legally binding

Question 11

Promises made under seal (PA)

Answer 11

Promises made under seal are enforceable without adequate consideration

*does not apply to contract for sale of goods

Question 12

Illusory Promise

Answer 12

A promise to perform that leaves performance to the discretion of the promising party is illusory

Does not constitute consideration

Question 13

Gratuitous Promises

Answer 13

Are legally binding upon satisfaction of the requirements of a gift

Requirements

1. Delivery of the would-be gif
2. A present intention to bestow the gift

Question 14

Past Consideration

Answer 14

General Rule: a promise given in exchange for something alreayd performed or given is not consideration

EXCEPTION

1. Written promise to pay a debt barred by the statute of limitations is binding
2. Written promise to pay all or part of an indebtedness that’s been discharged in bankruptcy is binding

Question 15

Promissory Estoppel

Answer 15

promissory estoppel allows for the enforcement of certain promises even where

there is no consideration in return.

Requirements (page 115);

1. A promise
2. Forseeable reliance
3. Actual reliance
4. Injustice without enforcement

*Actual reliance must be induced by the promise