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