CONSIDERATION

1
CONSIDERATION

• PRICE BARGAINED FOR AND EXCHANGED FOR A PROMISE
• FOR A PROMISE TO BE ENFORCEABLE AS A CONTRACT
  OBLIGATION, A LEGAL PRICE MUST BE EXCHANGED AND
  PAID FOR IT

2
CONSIDERATION TWO ELEMENTS

• THE PRICE MUST BE WHAT THE PARTIES BARGAINED FOR
  IN EXCHANGE FOR THE PROMISE
• THE PRICE MUST BE A LEGAL PRICE SOMETHING THE
  LAW RECOGNIZES AS LEGITIMATE CONSIDERATION

3
CONCEPT OF LEGAL DETRIMENT

• PROMISE TO DO SOMETHING OR DOING SOMETHING THAT
  THE PERSON IS NOT LEGALLY OBLIGATED TO DO
• E.G., PAY MONEY, PROVIDE SERVICES, DELIVER GOODS
• PROMISE TO REFRAIN OR REFRAINING FROM DOING
  SOMETHING THAT THE PERSON IS LEGALLY PRIVILEGED
  TO DO (GIVING UP A LEGAL RIGHT)
• E.G., AGREEING NOT TO SUE OR FILE BANKRUPTCY

4
PRE-EXISTING DUTY RULE

• PROMISE TO DO SOMETHING THAT ONE IS LEGALLY
  REQUIRED TO DO IS NOT CONSIDERATION
• NOR IS A PROMISE TO REFRAIN FROM DOING SOMETHING
  THAT A PERSON IS NOT LEGALLY PRIVILEGED TO DO

5
MODIFICATIONS OF A CONTRACT

• MODIFICATION OF A CONTRACT REQUIRES NEW OR
  ADDITIONAL CONSIDERATION TO BE BINDING
• A PARTY IS UNDER A PRE-EXISTING OBLIGATION TO
  PROVIDE THE CONSIDERATION UNDER THE ORIGINAL
  CONTRACT (THE OLD CONSIDERATION)

6
EXCEPTIONS TO NEW CONSIDERATION

• SALES CONTRACTS NEW CONSIDERATION NOT REQUIRED
  FOR MODIFICATION OF GOODS CONTRACTS GOOD FAITH
  IS REQUIRED
• GOOD FAITH ADJUSTMENTS (MINORITY RULE) -
  MODIFICATIONS BASED ON UNFORESEEABLE CIRCUMSTANCES

7
LIQUIDATED DEBTS

• PART PAYMENT OF A LIQUIDATED DEBT IS NOT
  CONSIDERATION FOR A PROMISE TO DISCHARGE THE DEBT
  
• NEED NEW OR ADDITIONAL CONSIDERATION, E.G.,
  PAYING DEBT BEFORE IT BECOMES DUE
• EXCEPTION FOR COMPOSITION AGREEMENTS

8
UNLIQUIDATED DEBTS AND CLAIMS

• PART PAYMENT OF AN UNLIQUIDATED DEBT OR CLAIM IS
  CONSIDERATION FOR A PROMISE TO DISCHARGE THE DEBT
  OR CLAIM
• AN AGREEMENT TO SETTLE A DISPUTED DEBT OR CLAIM
  IS CALLED AN ACCORD AND SATISFACTION

9
PRESENT V. PAST CONSIDERATION

• PAST CONSIDERATION IS NOT CONSIDERATION FOR A
  PROMISE
• REASON NO PRESENT EXCHANGE FOR THE PROMISE
• EXCEPTION
• DEBTS BARRED BY THE STATUTE OF LIMITATIONS
• WRITTEN PROMISE OR PAYMENT ON DISCHARGED DEBT
  REVIVES THE DEBT

10
SUFFICIENCY V. ADEQUACY OF CONSIDERATION

• CONSIDERATION NEED NOT BE FAIR OR EQUIVALENT
  ADEQUATE CONSIDERATION IS NOT REQUIRED
• HOWEVER, INADEQUATE CONSIDERATION MAY BE EVIDENCE
  OF A CONTRACT DEFENSE (E.G., FRAUD, INSANITY) AND
  COURT MAY REFUSE TO GRANT EQUITABLE REMEDY
  WITHOUT IT

11
PROMISSORY ESTOPPEL

• ACTS AS A SUBSTITUTE FOR CONSIDERATION
• PROMISE ENFORCEABLE BASED ON REASONABLE,
  DETRIMENTAL RELIANCE ON A PROMISE

12
PROMISSORY ESTOPPEL

• A PROMISE THAT THE PROMISOR SHOULD REASONABLY
  EXPECT TO CAUSE THE PROMISEE TO ACT OR FAIL TO
  ACT
• THE PROMISEE REASONABLY RELIES ON THE PROMISE AND
  ACTS OR FAILS TO ACT
• RELIANCE IS DETRIMENTAL INJUSTICE CAN ONLY BE
  AVOIDED BY ENFORCING THE PROMISE