1 / 10

Consideration

Consideration. 2.01 Understanding elements and characteristics of a contract. CONSIDERATION. Exchange of benefits and detriments by the parties to an agreements Requirements of consideration: Must involve a bargained-for exchange (promise made in return for another promise)

delu
Download Presentation

Consideration

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Consideration 2.01 Understanding elements and characteristics of a contract

  2. CONSIDERATION Exchange of benefits and detriments by the parties to an agreements • Requirements of consideration: • Must involve a bargained-for exchange (promise made in return for another promise) • Must involve something of value • Benefits and detriments must be legal • Benefits • Something that a party was not previously entitled to receive • Detriments • Any loss suffered; anything given up • Forbearance • Not doing something that you have the right to do

  3. Adequacy of Consideration • Courts don’t look at adequacy or value of an agreement unless it is “unconscionable” • Unconscionable • So grossly unfair or oppressive that it would shock the conscience of the court • So lop-sided that the average person would not agree to terms

  4. Nominal Consideration • Token amount in a written contract where either the parties cannot or do not wish to state the amount

  5. Agreements without Consideration • Promise to make a gift • Gifts have no consideration • Cannot be enforced • Gift that has been given • Doesn’t have to be returned • Donor – Gives the gift • Donee – Accepts the gift

  6. Illusory Promises Clause or wording that allows party to escape from legal obligation • Termination clause • Illusory – clause to allow termination of contract for any reason • Not illusory – termination only allowed after a change in defined circumstances • Output Contracts • Agreement to purchase all of a specific producer’s product • Requirements Contracts • Agreement to supply all of the needs of a specific buyer • Output & Requirements contracts are recognized by the courts as having consideration by implying fair dealing.

  7. Existing Duty • Existing Public Duty • No detriment • Obligation to obey the law • Existing Private Duty • If a person is already under legal duty to do something, another promise to do that same thing does not furnish consideration for a new contract.

  8. Past Performance • An act that has already been performed cannot be consideration in a contract.

  9. Exceptions to Consideration • Promises to charitable organizations • Gift or Pledge for future contribution • Enforceable as consideration if organization identifies the pledge for a specific use and acts in reliance on the pledge • Promises covered by the UCC • Firm offers • Good faith modification of contract • Promises discharged in bankruptcy

  10. Exceptions to Consideration • Promises barred from collection • Promissory Estoppel****** • Rely on what a person said • Elements: • Promise must bring action or forbearance • One who gave no consideration must have relied on the promise • Injustice can be avoided only enforcing the promise

More Related