L201 Chapter 12

What are the grounds for no consideration?

Promise amounts to a gift, is illusory, for past consideration, or pre-existing duty.

Promissory estoppel is now widely used as what?

A consideration substitute, not only in donative promise cases but those involving commercial promises contemplating a bargained-for exchange.

A promisee's promise not to commit a crime or tort can never be what?

A consideration.

What is one thing that separates a contract from an unenforceable social promise is what?

A contract requires voluntary agreement by two or more parties.

What is a liquidated debt?

A debt that is both due and certain. Parties have no good faith dispute about either the existence or amount of original debt.

What is unliquidated debt?

A good faith dispute about either the existence or amount of a debt.

What are composition agreements?

Agreements between a debtor and two or more creditors who agree to accept as full payment a stated percentage of their liquidated claims against the debtor at or after the date on which those claims are payable.

What is past consideration?

An act or other benefit given in the past that was not given in exchange for the promise in question. It cannot be consideration.

What are the following forms consideration may come in?

An act, forbearance, or return promise.

The consideration requirement is a classic example of what?

Contract law rule.

Once a bankrupt debtor is granted a __________, creditors no longer have legal right to collect __________ __________.

Discharge. Discharged debts.

Consideration does what?

Distinguishes agreements that the law will enforce from gratuitous promises, which are normally unenforceable.

What are the terms of something that isn't consideration?

Doing something you had a preexisting duty to do, promising to do something you had preexisting duty to do, nominal consideration, paying part of liquidated debt at or after date it is due, making illusory promise, past consideration, and preexisting moral obligation.

What are the terms of consideration?

Doing something you had no preexisting duty to do, promising to do something you had no preexisting duty to do, paying part of liquidated debt prior to date debt is due, paying liquidated debt in different medium of exchange, agreeing to settle unliquidated debt, and agreeing not to file suit when you have good faith belief in claim's validity.

True or false, if something is to be taken in consideration legally, it must have an economic promise or require an act.

False.

True or false, performing or agreeing to perform a preexisting duty is consideration.

False.

True or false, statutes of limitations do not set a time limit on a person's ability to pursue legal claim.

False.

True or false, the Code requires consideration for firm offers.

False.

True or false, when an accord and satisfaction has occurred, the creditor can maintain an action to recover the remainder of the debt allegedly due.

False.

What do critics say about contract modifications?

General principles such as good faith and unconscionability should be used to police them.

What is an example of unforeseen circumstances that made a party's performance more difficult?

If one company requested extra payment because of abnormal rock formations making construction more costly than reasonably expected, courts would enforce a promise to pay more.

What are the two provisions used by The Code to protect from fake claims that an agreement was modified?

If original agreement requires modification to be in writing, oral is not enforceable, and if price of goods in modified contract is $500 or more, modification is unenforceable unless requirements of Code's statute of frauds section are satisfied.

Why would something not be supported by consideration?

If the promisor did not ask for anything in exchange.

What is the common law rule on contract modification?

It requires some new (independent) consideration to be binding.

What is consideration?

Legal value, bargained for and given in exchange for an act or promise.

The Code does what to output contracts and requirements?

Legitimizes them, addressing the concern of exploitation by limiting a party's demands to those quantity needs that occur in good faith and are not unreasonably disproportionate.

What would remove a promise from the illusory category?

Limits on circumstances under which cancellation may occur, time in which cancellation may occur, or requirement of advance notice.

What did the Bankruptcy Reform Act of 1978 do?

Made it more difficult for debtors to reaffirm debts discharged in bankruptcy proceedings to reduce creditor attempts to pressure debtors to reaffirm.

Give an example of why someone would have to pay more because of a new consideration.

One company promises to install a better grade of carpet (no legal duty to do) in exchange for a new promise. The promise to pay would then be enforceable because it is supported by new consideration.

Public officials have a preexisting duty to do what?

Perform their public responsibilities.

How does The Code recognize the legitimate interest of both manufactures and sellers?

Provides an exclusive dealing contract that imposes a duty on the distributor to use their best efforts to sell the goods, and reciprocal duty on manufacturer to use best efforts to supply them.

What is nominal consideration?

Some small amount in consideration for a promise. Used if no other consideration is actually exchanged.

What are two important aspects of consideration?

The requirement tended to limit the scope of a promisor's liability by insulating him and the mechanical application of the requirement often produced unfair results.

What is an accord and satisfaction?

The settlement of an unliquidated debt.

Why do creditors agree to compositions?

They fear failure to do so may force debtor into bankruptcy proceedings.

What are the most important preexisting duty cases?

Those involving preexisting contractual duties. These generally occur when parties to existing contract agree to modify the contract.

True or false, a promisor's promises are enforceable if they got what they asked for, even if what they asked for wasn't adequately worth the value.

True.

True or false, composition agreements are generally enforced in courts.

True.

True or false, courts can enforce fair modification agreements by holding the parties mutually agreed to terminate their original contract and then entered a new one.

True.

True or false, prior to UCC, many common law courts used to refuse to enforce agreements to buy all merchandise on ground that the failure of good specificity rendered it illusory.

True.

True or false, the Code provides an agreement to modify a contract for the sale of goods needs no consideration to be binding.

True.

A creditor's promise to discharge a liquidated debt for partial payment of the debt at or after its due date is __________.

Unenforceable (due to lack of consideration).

When are promises to make gifts for charitable or educational purposes enforced?

When institution or organization to which the promise was made has acted in reliance on the promised gift (justified on basis of promissory estoppel or public policy).