Consideration, Capacity and Legality

Exceptions to a minor ability to disafirm

1) Marriage 2) contract to enlist 3) necessaries- upkeep the standard of living of a minor- they may be able to disafirm but they will be liable for the value of the goods.

What are agreements that lack consideration

1) Pre-Existing Duty

Legally Sufficient may contain?

1) a promise to do something that one has no prior legal duty to do 2)the performance of an action that one is otherwise not obligated to undertake 3)the refraining from an action that one has a legal right to undertake-- also known as forbearance

Requirements for Promissory estopel

1) there must be clear and definite promis 2) the promisor should have expected that the promisee would rely on the promise 3) the promisee reasonably relied on the promise of acting or refraining from some act 4) the promisee reliance was definite and becuase of it suffered reasonable detriment 5)enforcement of the injustice is necessary to avoid injustice if these requirements are met then the promisor will be estopped (barred) from using lack of consideration as a defense.

exceptions to contractual capacity

1)minors 2)Intoxicated Persons 3) Mental incapble persons

Past Consideration - Discuss

Allen Iverson example. One can have consideration only for events that happen in the future or in the present not in the past. The contract will not be valid if it was in the past.

exceptions to pre existing duties

Although preexisting duties are meant to prevent extortion and the hold up game there are some exceptions. Moreover, Unforeseen difficulties could be one of them... if for example in the example of the builders not finishing work there were some unforeseen difficulties that could not have reasonably foreseen at the orgination of the contract then the court could rule that there is consideration. Past Consideration- promises that are made in exchange for events or actions that have already taken place are not enforceable.. the reason why these lack consideration is that the element that fails to complete consideration is the bargained for exchange. past consideration is no consideration. Illusory Promises- if the terms of a contract express with such uncertainty of promise the contract will be unenforceable as it is said to have an illusory promise

What is Pre existing duty

An agreement will lack consideration if the consideration is based on pr existing duty. A cop cannot claim an award for finding someone if it was his preexisting duty to do so. likewise if a person is already bound to do something by a contract it can not be the grounds for a second contract

Difference between consideration in a Bilateral vs Unilateral contract

Bilateral- consists promise for a promise. I will ship goods to you in the promise that you will pay me for them when you receive them Unilateral- promise for an action. I will paint your house for 700 when it is done i will get paid.

Contracts against public policy

Business contracts that may be against public policy include: 1) Contracts in restraint of trade 2)unconciousnable

Consideration- Definition

Consideration is considered the value given in exchange for a promise

Intoxicated Persons

Either enforced or not depends on the amount or level of intoxication

Minors Explain

Generally a minor can enter into any contract that an adult would be able to except for those that are prohibited by the law such as purchasing alcohol or tobacco. A minor can usually void a contract by proving he should not be bound by it. there are however certain exceptions

What is bargained for exchange

In order for there to be consideration there must have been something bargained for in exchange. this is what distinguishes it with gifts. Moreover, in a bilateral agreement the bargained for exchange is a promise and in a unilateral agreement it is the action that is bargained for in exchange for the promise.

When are minors not minors anymore

In some states upon marriage Emancipation- when a parent relinquishes the legal right to exercise control over the child. (minors who leave home to support themselves are considered emancipated). a minor can petition a court to be emancipated

Contractual Capacity define

Is the legal ability to enter into a contract

Parents Liability

Only for necesaries as they are legally obliged to provide them for the child. A lot of time they have to cosign which essentially makes them liable for the contract as well.

Define Usury

Statute that states a maximum amount of interest that can be charged for a loan etc.

What are the elements of Consideration

The something in exchange has to be: 1) legal 2) there has to have been something bargained for exchange

Substantive unconscionability

When contracts or parts of contracts are overly harsh or oppresive

Adhesion contract define

a contract that is written by one side of the parties and not both leaving little to no room for negotiations

What is adequacy of consideration

adequacy of consideration looks at how fair the bargain was. Moreover, it tries to decipher whether the bargain was fair or not. However, courts are usually reluctant to enforce unequal bargains unless the disparity is so big that it could suggest fraud or duress.

Covenants not to compete in the sale of an ongoing business

allows the firm who is buying another firm to capture the goodwill of a purchase. essentially they are covenants that dont allow some one who just sold their buiness to create the same business and impinge on the good will

Unconscionable Contracts or Clauses define

bargains that are significantly unfair

Charitable Subscriptions

charitable subscriptions lack the exchange for bargain element and hence consideration however they are still able to enforce consideration as it is listed as an exception to the rule

illusory promises

if a contract does not actually promise something or is overly vague then it could be labelled as an illusory promise. Moreover, Option to cancel contracts can fall in this category if it is not phrased correctly. Without a notice there will not have been something in exchange and thus a contract will be unenforeable.

Obligation of a minor who wishes to dissafirm

in order for a minor to disaffirm a contract he or she need to only return the goods of the subject matter if they are in the minors possesion.

Ratification define

ratification is the process by which confirmation of an act or agreement that give legal force to an obligation that previously was not enforceable. they can ratify the agreement either impliedly or expressly. express ratification occurs when a minor explicitly states or puts in writing that he or she intends to be bound by the contract. Impliedly ratification is the process by which a minors acts are no longer in line with disaffirmance

Exculpatory clauses

release a party from any liability in the event that there are monetary or physical damages these clauses are frequently deemed unconscionable

Rescission

rescission is the unmaking of a contract as to put both parties back where they started. Some times if a contract is rescinded and a new contract was made it becomes difficult to sometimes determine if there was a preexisting duty.

Promissory Estopel

sometimes people rely on promises that have been made with consideration and can thus mean they can seek some form of recovery. there are however certain requirements for promissory estopel

Statute of limitation

statutes of limitations in states require all creditors to sue in a specific amount of time to recover debt. a debtor who promises to pay an old debt will be considered enforceable

Contract in restraint of trade

the US is very keen on competition in the economy. any contract that restrains the econoy from being able to compete freely will be void. however there are certain things that doe allow for this and they are called Convenants not to compete 1) covenants not to compete and the sale of an ongoing business 2) covenants not to compete in employment contracts

Legality define

the fourth requirement is the legality of the contract. if the act or promise that is in exchange is illegal the contract will be void and thus unenforceable. If the act is supposed to be tortious or against public policy it will also be void nd unenforceable. considered to be discharged by law if the act was deemed illegal after the signing of the contract Statutes that are contrary 1)Gambling 2)usury 3)Contracts to commit a crime 4) Licenscing- stock broker needs a license to file a bond

Dissaffirmance definition

the legal avoidance or putting aside a contractual obligation-- has to state in write or conduct-- cannot dissafirm a portion of it but has to be the whole contract. Dissafirm a waiver will end up allowing a minor to recover damages regardless. Must be reasonable time, can be done after they are of age but reasonable not 2 years after

Mentally incompetence. When is it Void? When is it Voidable? and When is it valid?

the person who goes into a contract needs to be mentally capable Void-- when a person has previously been deemed mentally incompetent and now has a guardian. if that person still goes into a contract then it will bevoid. only the guardian can go into a contract for them Voidable--if the person was mentally encapable at the time of entering into the contract but did not know he was the contract can be voidable, depends on what the person would want not the other party Valid-- if the mentally incapable person had at that time the capacity to understand then it will be valid. Some people have lucid intervals.

Exceptions to the consideration requirement

there are 3 types of promises that without cnsideration will still be enforced: 1)Promises that Induce detrimental value under the doctrine of promissory estoppel 2)promisses to pay debt that are barred by a statute of limitations 3) promises to make charitable donations

Covenants not to compete in employment contracts

usually for upper-middle management so that they cannot go to competing firms or create the same business.

Procedural Unconsciounable

usually the result of inconspiciuous print, unitelliogible language, and or lack of opportunity to read the contract. The consent is not voluntar because the bargaining power is so much on one side