Chapter 12-Elements of Consideration
Release Contains:
1. Agreement 2. Release contract signed in writing 3. Contract accompanied by cons.
Requirements to establish Pr. Es: (in Equity Court)
1. Must be a definite promise 2. Promisor should have expected that the promisee would rely on the promise 3. Promisee relied on the promise by acting or refraining from some act 4. Promisee's reliance was definite and resulted in substantial detriment 5. Enforcement of the promise is necessary to avoid injustice-justice served by enforcing promise
Covenant not to sue
Agreement to substitute contractual obligation for some other type of legal action based on a valid claim
Release
Agreement where one party gives up the right to pursue a legal claim against another party -Bars any further recovery beyond terms stated in release
Liquidated Debt
Amount has been ascertained, fixed, agreed on, settled, or determined. -Even with defined amounts creditors will enter agreements that allow debtors to pay a lesser amount than was originally owed
Past Consideration:
An act takes place BEFORE a contract is made No consideration because the bargained for exchange element is missing
Contracts contrary to public policy
Are void
Contracts in restraint of trade
Are void
Estopped
Barred,
Minor Exceptions
Contracts for Necessaries: -Food, shelter, may be dis. by minor who remains liable for the reasonable value of goods or services
General Rule
Courts don;t question unequal/fairness of contracts
Unliquidated Debt
Debt is an uncertain amount -Parties give up legal right to contest the amount in dispute and thus cons. is given
Intoxication
Lack of capacity at the time contract is being made is voidable
Disaffirmance
Legal avoidance of contractual obligations
Elements of Consideration:
Must have: Legal sufficient value and bargained for exchange Legal value: Promise or performance (to do something not usually obligated to do) , Forebearance (act of refraining from action that one has a legal right to undertake)
Minor Notes
Must return goods, even if damaged Even in misre. of age
Promissory Estoppel
Promise is enforced by law -Enforce a promise when the promisee has justifiably relied on the promise and when justice will be better served by enforcing the promise
Covenant not to Compete
Promise of one party to not conduct business similar to that of another party for a certain time within a geo. area
Preexisting Duty:
Promise to do what one already has a legal duty to do does not constitute legally suffiecient consideration. Exceptions: -Unforseen difficulties -Recession (contract is cancelled and return to positions before contract) and new contract
Illusionary Promise
Promisor has not definitely promised to do anything-without consideration and unenforceable
Bargained for exchange
Provide basis for bargain of legal value, exchanged between parties
Settlement Claims: Accord and Satisfaction
Settleing a dispute claim,whereby a DEBTOR offers to pay a LESSER amount than the creditor says is owed
Accord
The Agreement
Satisfaction
The performance
Consideration
Value given in return for a promise or performance in a contractual agreement