1L Contracts: Consideration Basic and Promissory Estoppel

Home > Preview

The flashcards below were created by user jesdixon on FreezingBlue Flashcards.

  1. Define consideration:
    Consideration-A bargained for exchange. An exchange is “bargained for” if it is what is sought by both parties as the reason or motivation for their exchange.

    • (1) Consists of: (1-act, 2-forbearance of act,
    • 3-promise)

    (2) Not applicable to the UCC
  2. What are the two theories for consideration:
    • Benefit/Detriment Theory (Traditional View)
    • Benefit to the promisor OR detriment to the promisee.

    In general, a waiver of any legal right

    Bargain for Exchange Theory (Modern View)-quid pro quo (MSPE)

    • Promise induces the detriment and the detriment
    • induces the promise

    (a) Was there a promise made by the promisor? (Offer)

    (b) Was there a promise or performance sought by promisor in exchange for the promise made?

    (c) Was there a promise or performance by the promisee?

    (i) Remember: Performance can be in the form of a forbearance.

    • (d) Was it in exchange for the promise made
    • by the promisor? (quid pro quo)
  3. General rule for mere language and consideration:
    Mere language of value does not prove value--Needs to be something in exchange (applies to promissory notes,
  4. Define Nominal v. Sham Consideration:
    Mere appearance of Consideration is Insufficient-

    (a) Nominal- actual exchange of something small to appear as consideration (IE $1)

    • (i) Exception: nominal
    • consideration OK for an option contract

    Sham- fake exchange; parties "say" there is consideration but not actually exchange anything.
  5. Gratuitous Promise
    • Giving someone something
    • for nothing. The promise is
    • unenforceable even if a detriment is incurred b/c promise is not in exchange for anything. Ex
  6. Whats the general rule for consideration and preexisting legal duties?
    Preexisting Legal Duties--then no consideration
  7. Whats the general rule for moral obligation and consideration?
    Moral Obligation is NOT consideration—unless the moral duty is a legal one.
  8. What's the general rule for past consideration?
    • Past Service/Act is
    • NOT Consideration- not sufficient;
    • must be PRESENT consideration. Something delivered/done before the promise is
    • executed is not legal consideration
  9. Define illusory promises:
    What the general rule for IP and consideration?
    • A promise to do nothing. Appears to be a
    • promise but is conditioned upon the promisor and no commitment is made. The
    • offer is not definite so not consideration.

    • (i) Not enforceable: Will not serve as
    • consideration b/c performance entirely optional with the promisor and no
    • commitment is made; Do not put any limitation on the freedom of the alleged
    • promisor
  10. What's the general rule for consideration and conditions?

    • An act that must be completed before the
    • acceptance of a contract.

    • (i) *Remember: There can be consideration when
    • there is a conditional gift…
  11. What's the general rule for sale of goods and consideration?
    • Sale of Goods: No consideration is needed. Covered under the
    • UCC
  12. What's the general rule for amount and fairness of consideration needed for a contract to be enforceable?
    • Fairness & Amount is not a question for the court: Courts will not weigh the consideration, or insist on a fair or even exchange. However, gross inadequacy of consideration may be relevant for other causes of action (IE: fraud,
    • mistake, lack of capacity, duress or undue influence)
  13. When is promissory estoppel applicable?
    Offer + acceptance but lack of consideration
  14. Define PE and what are the elements?
    • Promissory Estoppel—Substitute
    • for consideration; no consideration but unbargained detrimental reliance

    • (a) A promise which the
    • promisor should reasonably expect to induce action or forbearance of a definite
    • and substantial character on the part of the promisee and which does induce
    • such action or forbearance is binding if injustice can be avoided only by
    • enforcement of the promise.

    (a) Promise made

    • (i) Promise (can also be a blunt offer)—an assurance that a thing will or
    • will not be done

    (ii) Future intent does not form a promise.

    (iii) Promise can be implied by conduct or expressed by overt statement

    • (b) Foreseeable reliance on the promise to induce
    • action or forbearance

    (c) Reasonable and substantial reliance on promise to the detriment of the promisee

    • (d) Injustice would result w/ refusal
    • to enforce promise; necessary to
    • prevent injustice b/c detriment incurred in reliance to promise

Card Set Information

1L Contracts: Consideration Basic and Promissory Estoppel
2011-08-30 22:18:50
1L Contracts Consideration Basic Promissory Estoppel

Contracts: Consideration Basic and Promissory Estoppel
Show Answers:

Home > Flashcards > Print Preview