Law 1101 chapter 12 PDF

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Summary

 Adequacy of Consideration Involves “how much” consideration is given. Concerns the fairness of the bargain  The General Rule: court will typically not question adequacy of consideration  When Voluntary Consent May Be Lacking court may question adequacy of consideration  Know this: A consumer’s ...

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 Adequacy of Consideration - Involves “how much” consideration is given. - Concerns the fairness of the bargain  The General Rule: court will typically not question adequacy of consideration  When Voluntary Consent May Be Lacking court may question adequacy of consideration  Know this: A consumer’s signature on a contract does not always guarantee that the contract will be enforced. The contract must also comply with state and federal consumer protection laws.  Great Case Example:  Hamer v. Sidway (1891): whether uncle’s promise to give nephew money if nephew promised to refrain from drink alcohol, using tobacco, and playing billiards and cards until the age of 21 was enforceable?  The principles of this case remain applicable to contracts formed today, including online contracts.  Forbearance can constitute adequate consideration sufficient to form a valid and enforceable contract.  Agreements that lack consideration –

Preexisting Duty: typically, a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration •

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Unforeseen Difficulties may be an exception to above-rule

Rescission and New Contract: law recognizes that two parties can mutually agree to rescind, or cancel, their contract, at least to the extent that it is executory (still to be carried out). •

Rescission: unmaking of a contract so as to return the parties to the positions they occupied before the contract as made

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Past Consideration: An act that takes place before a contract is made and that ordinarily, by itself, cannot later be consideration with respect to that contract.

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Illusory Promises – if the terms of a contract express such uncertainty of performance that the promisor has not definitely promised to do anything, the promise is illusory and thus not enforceable due to lack of consideration

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Option-to-cancel clauses in contracts for specified time periods sometimes present problems because of illusory promises.

 Settlement of Claims –

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Accord and Satisfaction: a debtor(borrower) offers to pay and a creditor(lender) accepts a lesser amount than the creditor originally claimed as owed. Accord is the agreement and satisfaction is the performance (usually payment). •

Liquidated Debts: debt that has been ascertained, fixed, agreed on, settled or exactly determined. In such case, accord and satisfaction cannot take place. Even with liquidated debts, creditors will often enter into settlement agreements that allow debtors to pay a lesser amount than was originally owed.

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Unliquidated Debts: amount of debt is not settled, fixed, agreed on, ascertained, or determined and reasonable person may differ over the amount owed.

Release: An agreement in which one party gives up the right to pursue a legal claim against another party. •

A release will be generally binding if: 1. The agreement is made in good faith. 2. The release contract is in a signed writing. 3. The contract is accompanied by consideration. (Under UCC, a written, signed waiver by an aggrieved party discharges any further liability for a breach, even without consideration.)

Ex) Kara’s car is damaged in an accident caused by Raoul’s negligence. Raoul offers to give Kara $3,000 if she will release him from further liability resulting from the accident. Kara agrees and signs the release. If Kara later discovers that the repairs will cost $4,200, she cannot recover the additional amount from Raoul. Kara is limited to the $3,000 specified in the release because a valid contract was formed. Kara and Raoul both voluntarily agreed to the terms in a signed writing, and sufficient consideration was present. The consideration was the legal right to recover damages that Kara forfeited should her damages be more than $3,000, in exchange for Raoul’s promise to give her $3,000.

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Covenant Not to Sue: An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim. 

Unlike release, a covenant not to sue does not always prevent further recovery. Suppose that Kara agrees not to sue Raoul for damages in a tort action if he will pay for the damage to her car. If Raoul fails to pay, Kara can bring an action for breach of contract....