Consideration

Question 1

What is consideration?

Answer 1

• First, identify the promise breaker, i.e., the person who is not doing what she promised to do.
• Second, ask whether that person asked for something in return for her promise, i.e., bargained for something.
• Third, look at the person who is trying to enforce the promise and ask what requested legal detriment that person sustained.

In sum, look for bargained-for legal detriment.

Question 2

Elements of Consideration

Answer 2

1. bargained for exchange
2. for legal value

Question 3

“Bargained for”

Answer 3

• the promise must induce detriment and the detriment induce the promise
• there is no bargain if it is a gift
• Past or Moral consideration is something already done and thus doesn’t satisfy this requirement

Question 4

Exception to Past/Moral Consideration

Answer 4

• if there is a new promise, made in writing or is partially performed

Question 5

act of forebearance by promisee must be of benefit….

Answer 5

act of forebearance by promisee must be of benefit to the promisor

the benefit however need not be economic - peace of mind is enought

Question 6

Adequecy of Condsideration

Answer 6

Courts do not consider adequecy or fairness of consideration unless it is entirely devoid of value

Question 7

Legal Benefit AND Legal Detriment

Answer 7

Legal detriment resultrs if the promisee does something he is not legally obligated to do or refrains from doing something he has a legal right to do. A legal benefit is the opposite

Question 8

Preexisting Legal Duty

Answer 8

Promising or performing an existing legal duty is insufficient consideration

Question 9

Exceptions to Preexisting Duty Rule

Answer 9

1. new or different consideration is promised
2. the promise is to ratify a voidable obligation
   
   • Ex: ratifying a K with a minor when he reaches majority
   • Ex: ratifying a K induced by fraud
3. the preexisting duty is owed to a 3rd person, not the promisor
4. there is an honest dispute as to the duty
5. unforseen circumstances sufficient to discharge a party
   
   • impracticalability

Question 10

Forebearance to Sue

Answer 10

A promise to refrain from suing may constitute consideration if the claim is valid or the claimant in good faith believe the claim was valid

Question 11

Mutual and Illusory Promises

Answer 11

Consideration must exist on both sides - mutuality

If only 1 party is bound to be performed then the promise is illusory and is unenforceable.

Question 12

Right to choose alternative courses

Answer 12

Illusory unless every alternative involves legal detriment to the promisor - the promise will not be found illusory if:

1. at least 1 alt involves legal detriment and the power to choose rests with the promisee or a 3rd party; or
2. a valudable alternative with legal detriment is actually selected

Question 13

Promissory Estoppel (Detrimental Reliance)

Answer 13

A promise is enforceable to prevent injustice if:

1. the promisor should reasonably expect to induce action or forebearance; and
2. such action/forebearance is induced

Question 14

Damages for Promissory Estoppel (Detrimental Reliance)

Answer 14

Some jurisidctions - expectation damages

2nd Restatement - the remedy may be limited as justice requires - thus reliance damages

Question 15

Covenants not to Compete

Answer 15

Enforcable if the services to be performed are:

1. unique and
2. the covenant is reasonable. Reasonable is:
   
   1. necesseary to protect a legitimate interest
   2. reasonable to geopgraphic scope and duration
   3. must not harm the public