BUS 131 Chapter 13 Notes
BUS 131 Chapter 13 Notes BUS 131 - 010
Kutztown University of Pennsylvania
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BUS 131 - 010
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This 3 page Class Notes was uploaded by Whitney Davis on Monday February 29, 2016. The Class Notes belongs to BUS 131 - 010 at Kutztown University of Pennsylvania taught by Dr. Slamon in Spring 2016. Since its upload, it has received 27 views. For similar materials see Business Law I in Business at Kutztown University of Pennsylvania.
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Date Created: 02/29/16
Chapter 13: Consideration Elements of Consideration Something of “legally sufficient value” must be given in exchange for the promise There must be a “bargained-for” exchange Legally Sufficient Value o May consist of: A promise The performance Forbearance Refraining from an action o Consideration in bilateral contracts Promise for a promise o Consideration in unilateral contracts Promise for performance Bargained-For Exchange o Second element of consideration o Distinguishes contracts from gifts Adequacy of Consideration How much consideration is given Concerns fairness of bargain The General Rule o Court will not question adequacy of consideration based on comparative value of things exchanged o Exchange of promises and potential benefits o Courts leave it up to the parties to decide what something is worth Under doctrine of freedom of contract When Voluntary Consent May Be Lacking o Inadequate consideration can indicate that fraud, duress, or undue influence was involved Agreements That Lack Consideration Preexisting Duty o If party is bound by contract to perform a certain duty, that duty cannot serve as consideration for second contract o Exceptions Unforeseen Difficulties Rescission and New Contract Rescission the unmaking f a contract so as to return the parties to the positions they occupied before the contract was made o Past Consideration No consideration Illusory Promises o Without consideration and unenforceable o When a promise fails to bind the promisor o Option-to-Cancel Clauses When promisor has option to cancel contract before performance begun, promise is illusory o Requirements and Output Contracts Settlement of Claims Claims are settled through accord and satisfaction o Debtor offers to pay, a creditor accepts, a lesser amount than creditor originally claimed was owed o Accord = agreement o Satisfaction = the performance after accord is executed o Liquidated Debts One whose amount has been ascertained, fixed, agreed on, settled, or exactly determined o Unliquidated Debts Amount of debt is NOT settled, fixed agreed on, ascertained, or determined, and reasonable persons may differ over amount owed Release o A contract in which one party forfeits right to pursue legal claim against other party o Requirements: Honesty Required in many states Contract is accompanied by consideration Covenant Not to Sue o An agreement to substitute contractual obligation for other type of legal action based on valid claim o Does not always bar further recovery Exceptions to the Consideration Requirement Possible enforced promises: o Inducing detrimental reliance, under doctrine of promissory estoppel o Paying debts barred by statute of limitations o Making charitable contributions o Promissory Estoppel A.k.a. detrimental reliance A person who has reasonably and substantially relied on promise of another may obtain some measure of recovery Estopped = prevented o Requirements to State a Claim Must be a clear and definite promise Promisor should expect that promisee would rely on promise Promisee reasonably relied on promise by acting or refraining from some act Promisee’s reliance was definite and resulted in substantial detriment Enforcement of promise is necessary to avoid injustice o Application of doctrine Promises to Pay Debts Barred by a Statute of Limitations o Requires creditor to sue within specified period to recover debt o Promise needs no consideration Charitable Subscriptions o Promises to make donations to religious, educational, or charitable institutions