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Contracts consideration business law

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Contracts consideration business law

Contracts consideration business law

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Contracts consideration business law Contracts consideration business law Presentation Transcript

  • Contracts Consideration
  • Introduction
    • Consideration is legal value given in return for a promise or performance.
      • Must have something of legal value or sufficiency.
      • Must be a bargained-for exchange.
  • §1: Elements of Consideration
    • Consideration for a promise must be either:
      • Legally detrimental to the promisee, or Legally beneficial to the promisor.
    • “ Legal Value”:
      • Promise,
      • Performance, or
      • Forbearance.
    • Case 11.1: Hamer v. Sidway (1891).
  • §2: Adequacy of Consideration
    • A Court will not question the fairness of the bargain if legally sufficient.
      • Law does not protect a person from entering into an unwise contract.
      • In extreme cases, a court may find that a party lacks legal capacity or that contract was unconscionable.
    • Case 11.2: Powell v. MVE Holdings (2001).
  • §3: Agreements That Lack Consideration
    • Preexisting Duty.
      • A promise to do what one already has a legal duty to do does not constitute legally sufficient consideration.
      • Exceptions:
        • Unforeseen Difficulties.
        • Recession and New Contract.
    • Past Consideration is no consideration because the bargained-for exchange element is missing.
  • §4: Problem Areas Concerning Consideration
    • Uncertain Performance.
    • Settlement of Claims.
    • Promises enforceable without consideration.
  • Uncertain Performance
    • Illusory Promises.
      • Promisor has not definitely promised to do anything (no promise at all).
    • Option-to-Cancel Clauses.
    • Requirements and Output Contracts.
  • Settlement of Claims
    • Debtor offers to pay a lesser amount than the creditor purports to be owed.
    • Accord and Satisfaction.
      • Liquidated Debt.
        • Amount has been ascertained, fixed, agreed on, settled, or exactly determined.
      • Unliquidated Debt.
        • Parties give up legal right to contest the amount in dispute, and thus consideration is given.
  • Settlement of Claims [2]
    • Release bars any further recovery beyond the terms stated in the release.
      • Case 11.3: Mills v. Berlex Laboratories (1999).
    • Convenant not to Sue is an agreement to substitute contractual obligation for some other type of legal action based on a valid claim.
  • Promises Enforceable Without Consideration
    • Promises to Pay Debt Barred by a Statute of Limitations.
    • Detrimental Reliance and Promissory Estoppel:
      • Must be definite promise.
      • Promisee must justifiably rely on the promise.
      • Reliance is substantial.
      • Justice will be served by enforcing promise.