BSL 212 Chapter 12 Study Guide
BSL 212 Chapter 12 Study Guide BSL212
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This 6 page Study Guide was uploaded by taylor Notetaker on Wednesday March 11, 2015. The Study Guide belongs to BSL212 at University of Miami taught by in Spring2015. Since its upload, it has received 55 views. For similar materials see Intro to Business Law in General at University of Miami.
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Date Created: 03/11/15
BSL212 Chapter 12 inducement to make a promise enforceable ensures that promises are enforced only where parties have exchanged something of value in the eye of the law 0 present only when the parties intend an exchange consideration exchanged may be an act a forbearance to act or a promise to do either of these 0 two basic elements both legal suf ciency and bargainedfor exchange must be present 0 something of value in the eye of the law consideration must be either a legal detriment to the promisee or a legal bene t to the promisor 1 the doing of or the undertaking to do that which the promisee was under no prior legal obligation to do or 2 the refraining from the doing of or the undertaking to refrain from doing that which he was previously under no legal obligation to refrain from doing 0 the obtaining by the promisor of that which he had no prior legal right to obtain 0 most times both are present but presence of either is sufficient legal suf ciency has nothing to do with it c not required where parties have freely agreed to the exchange 0 law regards the consideration as adequate if parties have freely agreed to the exchange 0 items or actions agreed upon to exchange do not need to have same value promise is exchanged for a completed act or a forbearance to act 0 only one existing promise so only offerorpromisor makes a promise of which the offereepromisee is receiving 0 promise is only binding if it is supported by consideration consisting of either a legal detriment to promisee or a legal bene t to promisor may also consist of a promise exchanged for forbearance in which case it is binding because it s supported by consideration D promissee incurred legal detriment by refraining from bringing suit which he was under no prior legal obligation to refrain from doing 0 promisor has received a legal bene t because she had no prior legal right to promisee39s forbearance from bringing suit exchange of promises thus each party is both a promisor and a promisee each promise is the consideration for the other 0 general consequence is that each promisor in a bilateral contract must be bound or neither is bound a statement that is in the form of a promise but imposes no obligation upon the maker of the statement not consideration for a return promise thus a statement committing the promisor to purchase such quantity of goods as he may quotdesirequot or quotwantquot or quotwish to buyquot is illusory promise because its performance is entirely oonnal output and requirements contracts 0 agreement of a seller to sell her entire production to a particular purchaser gives seller an ensured market for her product 0 a purchaser39s agreement to purchase from a particular seller all the materials of a particular kind that the purchaser needs ensures the buyer of a ready source of inventory or supplies 0 NOT ILLUSORY buyerseller does not promise to buysell how much they want to buysell states they buysell how much they needis desired 0 Code imposes a upon the quantity to be sold or purchased under an outputrequirements contract thus involves such actual output or requirements as may occur in good faith except that no quantity unreasonably disproportionate to any stated estimate or in absence of stated estimate to any normal prior output or requirements may be tendered or demanded a contract in which a manufacturer of goods grants to a distributor an exclusive right to sell its products in a designated market 0 unless otherwise agreed an is imposed on the manufacturer to use its best efforts to supply the goods and on the distributor to use her best efforts to promote their sale these are sufficient consideration to bind both parties to the exclusive dealing contract a promise the performance of which depends upon the happening or nonhappening of an event not certain to occur the condition 0 suf cient consideration UNLESS promisor knows at the time of making the promise that the condition cannot occur preexisting obligations a duty the terms of which are neither doubtful nor the subject of honest dispute 0 the performance of or promise to perform this duty is legally insuf cient consideration because the doing of what one is legally bound to do is neither a detriment to a promisee nor a bene t to the promisor 0 KNOW M occurs when the parties to the contract mutually agree to change one or more of its terms under common law a modi cation of an existing contract must be supported by mutual consideration to be enforceableljmust be supported by some new consideration beyond that which is already owed under the original contract 0 thus must be a separate and distinct modi cation contract Code has modi ed the common law rule for contract modi cation by providing that the parties can effectively modify a contract for the sale of goods without new consideration provided they both intend to modify the contract and act in good faith Restatement has moved toward this position by providing that a modi cation of an executor contract is binding if it is fair and equitable in the light of surrounding facts that the parties had not anticipated when the contract was made results when the parties to a contract mutuay agree to rescind their original contract and enter into a new one situation actuay involves three separate contracts binding in that as long as each party still had rights under the original contract perfectly valid allowing parties to effectively discharge the original contract and to impose obligations under the new one o settlement of an undisputed debt an obligation that is not contested as to its existence or its amount common lawpayment of a lesser sum of money than is owed in consideration of a promise to discharge a fully matured undisputed debt is legally sufficient to support promise of discharge Restatement requires that the new consideration quotdiffers from what was required by the duty in a way which re ects more than a pretense of bargainquot o settlement of a disputed debt an obligation whose existence or amount is contested a promise to settle a validly disputed claim in exchange for an agreed payment or other performance is supported by consideration when dispute is based on contentions without merit or not made in good faith the debtor s surrender of such contentions is not a legal detriment to the claimant Restatement adopts a different position by providing that the settlement of a claim that proves invalid is consideration if at the time of a settlement 1 the claimant honestly believed that the claim was valid OR 2 the claim was in fact doubtful because of uncertainty as to the facts or the law requirements 1 the parties have agreed to an exchange 2 with respect to each party the subject matter exchanged or promised in exchange either imposed a legal detriment or bene t if consideration is clearly without value such that the transaction is a sham many courts hold that the consideration is lacking a mutually agreedupon exchange central idea behind consideration is that the parties have intentionally entered into a bargainedfor exchange with each other and have each given to the other something in a mutually agreedupon exchange for his promise or performance an act done before the contract is made is not consideration 0 a promise made on account of something that the promisee has already done is not enforceable consideration to support a promise may be given to a person other than the promisor if the promisor bargains for that exchange 0 certain transactions are enforceable even though they are not supported by consideration 0 promises to perform prior unenforceable obligations in certain circumstances the courts will enforce new promises to perform an obligation that originally was not enforceable or that has become unenforceable by operation of law situations include promises to pay debts barred by the statute of limitations 0 states that legal actions to enforce a debt must be brought within a prescribed period of time after the rights to bring the action arose o actions not begun within the speci ed period such periods vary among the states and also with the nature of the legal action will be dismissed 0 an exception to the past consideration rule extends to promises to pay all or part of a contractual or quasicontractual debt barred by the statute of limitations new promise is binding according to its terms without consideration for a second statutory period c any recovery under the new promise is limited to the terms contained in the new promise most states require that new promises falling under this rule except those partially paid must be in writing to be enforceable promises to pay debts discharged in bankruptcy o promise to pay a debt that has been discharged in bankruptcy is also enforceable without consideration Bankruptcy Code however imposes a number of requirements that must be met before such a promise may be enforced o voidable obligationspromises o a new promise to perform a voidable obligation that has not previously been avoided the power of avoidance may be based on 0 lack of capacity 0 fraud misrepresentation duress unduein uence mistake for instance promise to perform an antecedent obligation made by a minor upon reaching the age of majority is enforceable without new consideration to be enforceable promise itself must not be voidable occasionaly promises to pay moral obligations 0 under common law and in most states promise made in order to satisfy a preexisting moral obligation is made for past consideration and therefore is unenforceable for lack of consideration promises to pay another for board and lodging previously furnished to one s needy relative promises to pay debts owed by a relative o Restatement and a minority of states recognize moral obligations as consideration provides that a promise made for quota bene t previously received by the promisor from the promisee is binding to the extent necessary to prevent injusticequot o promissory estoppel does not mean that a promise given without consideration is binding simply because it is followed by a change of position on the part of the promisee such a change of position in justi able reliance on the promise creates liability if injustice can be avoided only by the enforcement of the promise most common application of doctrine of promissory estoppel is to charitable subscriptions churches memorials college buildings stadiums hospitals and other religious educational or charitable purposebuildings have been built with assistance of contributions made through ful llment of pledges or promises to contribute to particular worthwhile causes 0 although pledger regards herself as making a gift and gift promises tend not to be enforceable courts have generally enforced charitable subscription promises o contracts under seal 0 promises made enforceable by statute 0 those made without consideration not legally enforceable except under certain circumstances
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