Business Law CH 12 - Consideration

Legal detriment

(1) Doing an act that one is not legally obligated to do or (2) refraining from doing an act that one has a legal right to do

Promise to pay debt barred by the statute of limitations

A new promise by the debtor to pay the debt renews the running of tje statute of limitations for a second statutory period

Voidable promises

A new promise to perform a voidable obligation that has not beem previously avoided is enforceable

Moral obligation

A promise made to satisfy a preexisting moral obligation is generally unenforceable for lack of consideration

Requirement contract

Agreement to buy all of one's needs

Output contract

Agreement to sell all of one's production

Legal sufficiency

Benefit to the promisor or detriment to the promisee

Promissory estoppel

Doctirne that prohibits a party from denying his promise when the promisee takes action or forbearance to his detriment reasonaly based upon the promise

Consideration

Inducement to make a promise enforceable

Promise to pay debt discharged in bankruptcy

May be enforceable without consideration

Bargained-for exchange

Mutually agreed-upon exchange

Adequacy of consideration

Not required where parties have freely agreed to the exchange

Undisputed debt

Obligation whose existence and amount are not contested

Disputed debt

Obligation whose existence or amount is contested

Conditional promise

Obligations contingent upon a stated event

Legal benefit

Obtaining something to which one had no legal right

Substituted contract

Parties rescind ther original contract and enter into a new one

Settlement of a disputed debt

Payment of a lesser sum of money to discharge a disputed debt is legally sufficient consideration

Settlement of an undisputed debt

Payment of a lesser sum of money to discharge an undisputed debt does not constitute a legally sufficient consideration

Settlement of an undisputed debt

Payment of a lesser sum of money to discharge an undisputed dept does not constitute legally sufficient consideration

Preexisitng contractual duty

Performance of a preexisitng contractual duty is not consideration

Preexisting public obligations

Performance of public duties such as those imposed by tort or criminal law is neither a legal detriment nor a legal benefit

Promisor

Person making promise

Promisee

Person receicing a promise

Illusionary promise

Promise imposing no obligation on the promisor

Gratutious promise

Promise made without consideration

Exclusive dealing

Sole right to sell goods in a defined market

Statute of limitations

Time period within which a lawsuit must be initiated

Past consideration

Unbargained-for past events

Modification of preexisting contract

Under the common law, a modification of a preexisting contract must be supported by mutual consideration; under the Uniform Commercial Code a contract can be modified without new consideration

Contracts under seal

Where still recongnized, the seal acts as a substitute for consideration