Consideration

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Consideration by Mind Map: Consideration

1. Defined

1.1. A bargained for exchange of something with legal value

1.1.1. Typically falls into a category of benefit to the promisor and detriment to promisee

1.1.2. Does include forbearance, not love and affection.

2. Sufficency V Adequacy

2.1. Adequacy

2.1.1. Not typically looked at by the Court Unless:

2.1.1.1. Nominal Consideration

2.1.1.1.1. Appears like a gift (ie. $1 for a 1000)

2.1.1.2. Fungible for like fungible

2.1.1.2.1. Dollar for Dollar, Bushel for bushel. Must be capable of interchange.

2.1.1.3. Before decree of specific performance

2.2. Sufficency

2.2.1. Does the items exchanged have value in the eyes of the law

2.2.1.1. Always checked by courts

3. Forberance as consideration

3.1. Must be giving up a right to do something that you had a legal right to do.

3.1.1. MUST BE SOUGHT BY PROMISOR

3.2. Valid v. invalid

3.2.1. The following situations of invalid claims

4. Insufficent Consideration

4.1. Past consideration is not sufficent consideration

4.1.1. Act or promise occurred before the exchange. Nothing was completed to get the promise.

4.2. Illusory Promises

4.2.1. Not contracts unless both parties are mutually obligated.

4.2.1.1. Exceptions

4.2.1.1.1. Exclusive Dealing Contracts

4.2.1.1.2. Requirement and OUtput contracts

4.2.1.1.3. Continuing offers

4.2.1.1.4. Alternative/multiple promises

4.3. Pre-existing duty

4.3.1. Matter of public policy.

4.3.1.1. Designed to prevent unjust enrichment due to holdouts

4.3.2. Cannot get anything beyond what was already expected to do.

5. Accord & Satisfaction

5.1. When accepting something other than what was originally owed.

5.1.1. To avoid 1. Contract can be terminated 2, Contracts can be modified 3. 2-209 R/s 89 change is done in good faith with either a good commercial reason or unexpected circumstances.

5.1.1.1. Either party gives something and new consideration is usedc

5.2. 3-311, Accord and Satisfaction with an instrument

5.2.1. 1. Disputed debt owed

5.2.1.1. No duty toi pay on disputed debt until legal resolution

5.2.2. 2. A person in good faith, pays in full satisfaction, must note on check

5.2.2.1. must go to specified location, with explanation

5.2.3. 3. Check cashed, shows that the debt is discharged

5.2.3.1. must be in 90 days.

5.2.3.1.1. Cannot cross out "paid in full"

5.2.3.1.2. If known what check was for, 90 day period is lost.

6. Substitutes to True Consideration

6.1. Promissory Estoppel

6.1.1. Elements

6.1.1.1. 1. Promise by promisor

6.1.1.2. 2. Promisor must reasonably expect that the promise will induce action or foreberance

6.1.1.3. 3. Induces reasonable reliance by promisee

6.1.1.4. 4. Injustice can only be avoided by enforcement

6.1.1.5. 5. Remedy Granted is tailored as justice requires

6.1.2. Exception: Charities and Construction

6.1.2.1. Charities

6.1.2.1.1. Enforceable due to following theories

6.1.2.2. Subcontractor and General contractors

6.1.2.2.1. using bids to create contracts causes reliance of the bid

6.2. Moral Obligation

6.2.1. Occurs in the following situation

6.2.1.1. Promises to pay

6.2.1.1.1. Statute of Limitations barred debt

6.2.1.1.2. Incurred in infancy

6.2.1.1.3. Discharged in bankruptcy

6.2.1.1.4. If acknowledged at any time, the entire debt is revived unless limited.

6.2.1.2. Material Benefit

6.2.1.2.1. Received a benefit (in emergency situations) then the promise to pay.

6.2.1.2.2. creates moral obligation (also implied by court as bodily harm was avoided and would have been asked for if he could)