CONSIDERATION

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CONSIDERATION

• - The exchange of benefits and detriments by the
  parties to an agreement

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Something that a party was not previously
entitled to receive.
Benefit-
Detriment-
Any loss
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Ill sell you my car for 2,900
Ill buy it!
Benefit-
Car
Benefit-

Detriment-

Detriment-
Car
Ill have two hotdogs please
Thatll be 2
Benefit-
Benefit-
Dogs

Detriment-
Detriment-

Dogs
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Sally, will you go to the prom with me?
Id love to Timmy!
.TWO DAYS BEFORE PROM.
You Jerk! Ill sue you!!
sorry I cant go to the prom with you.
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THREE TYPES OF DETRIMENTS

• Giving up something, or promising to give up
  something that you have a legal right to keep.
• 2. Doing something, or promising to do
  something that you have a legal right not to do.
• 3. Forbearance-not doing something that you
  have the legal right to do.

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Adequacy of Consideration

• Generally, the courts do not look into the
  adequacy of the consideration
• The courts do not see whether the value of
  consideration was fair to both parties

Dean agrees to sell to Tina a piano worth
100,000 in exchange for Tina's promise to pay
50,000. The contract is supported by sufficient
consideration by both parties. Without more,
evidence of fraud, a court will not inquire into
the inequality of the consideration.
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Adequacy of Consideration

• Case A fast talking salesman persuades an
  elderly lady to sign a contract for services
  worth 4,000 for 40,000.

This is unconscionable!
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AGREEMENTS WITHOUT CONSIDERATION

• Promise to Make a Gift
• A gift is given freely, for no consideration
• A promise to make a gift is not enforceable
• When a gift is made, it becomes the other parties
  property

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AGREEMENTS WITHOUT CONSIDERATION

• Promise to obey the Law
• All persons are obligated to obey the law

EXgt Tims mom knows he has been skipping school.
She offers him 10 a day for every day he attends
payable at the end of the school year.
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Case

• Lee stole Bob's yacht. Boss Hogg, the county
  sheriff, witnessed the theft. Bob told Boss Hogg,
  "I'll pay you 1000 to arrest Lee." Boss Hogg
  arrests Lee. Bob's promise is not legally
  enforceable because Boss Hogg already had a duty
  to arrest Lee. In making the arrest, Boss
  suffered no new legal detriment and conferred no
  new legal benefit on Bob.

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AGREEMENTS WITHOUT CONSIDERATION

• 3. Preexisting Duty
• If a person is under legal obligation to do
  something, a promise to do the same thing does
  not furnish consideration.

Bob's promise is not legally enforceable because
Boss Hogg already had a duty to arrest Lee. In
making the arrest, Boss suffered no new legal
detriment and conferred no new legal benefit on
Bob.
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Case

• A heavy object falls from a shelf. Jane pushes
  Sam out of its path, but it strikes and injures
  her. Sam promises to pay her 500 a month for
  life.

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AGREEMENTS WITHOUT CONSIDERATION

• Past Consideration
• The giving or exchanging of benefits and
  detriments must take place at the time the
  contract is made.

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Case

• Tex promises to sell to Benny, and Benny promises
  to buy from Tex, as many barrels of oil as Benny
  might decide to order from Tex at 28 a barrel.

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AGREEMENTS WITHOUT CONSIDERATION

• 5. Illusory Promise

Both parties must be obligated to do something.
Lack of consideration prevents formation of a
contract. Benny may buy no oil. His promise is
illusory. The agreement lacks the mutuality of
obligation required for a bilateral contract.
Benny, by his promise, incurs no legal detriment
and confers no legal benefit. The rule is that
both parties must be bound or neither is bound.
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AGREEMENTS WITHOUT CONSIDERATION

• Agreements to attend a Social Engagement

Not enforceable!
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AGREEMENTS WITHOUT CONSIDERATION

• Promise to Make a Gift
• Promise to obey the Law
• Preexisting Duty
• Past Consideration
• Illusory Promise
• Promise to attend Social Engagements

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SPECIAL APPLICATIONS OF CONSIDERATION(Partial
Payment of a Debt)

• - Each promise made as consideration for another
  promise must create a new obligation

Promising to do something you are already legally
bound to do is not binding!
EXAMPLE Terry owes Scott 500. The balance is
past due. Scott agrees to accept 250 as payment
in full but later sues Terry for the additional
250 owed under the original contract.
However..
Say, Scott is hurting for cash, so he calls Terry
and says I know your balance of 500 is not due
until the end of the month. But if you pay me
now Ill only charge you 250 and call it even.
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SPECIAL APPLICATIONS OF CONSIDERATION(Settlement
of Disputed Claims)
EXAMPLE Terry insists that 500 is just too high
a price for the work performed by Scott. Terry
maintains the service to be worth 250. Scott
agrees to compromise at 350 as payment in full.

• You bring your car in for repairs. The bill you
  receive for the service is more than you think is
  reasonable. You can send the amount in to the
  shop you think is reasonable and write on the
  check

In full payment of the amount I owe
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SPECIAL APPLICATIONS OF CONSIDERATION(Extension
of Time for Payment)

• There is no consideration for the promise of time
  extension.

EXAMPLEgt Company xyzs 100,000 loan from the
Bank of Greed is due. Bank VP Tim Scrwyaover
agrees to extent time of payment 30 days.
However, the next day Scrwyaover rescinds the
promise and brings suit against xyz.
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Promises Enforceable Without Consideration
Pledges and Subscriptions (State to State/Court
to Court)
Courts try to enforce these because they usually
involve charities and are in the publics best
interest.
EXAMPLE Mary pledges to donate 10 million to
the University of Florida. The University begins
construction of a new building. Mary retracts her
pledge.
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Promises Enforceable Without Consideration
Promissory Estoppel
Used to prevent injustice when one changes ones
position significantly in reliance with anothers
promise and the promise is not fulfilled.
Courts will ESTOP the person claiming no
consideration
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Promissory Estoppel

• 3 Conditions Must Be Met

1. The promise must be made to bring about an
action.
2. The one who gave no consideration must have
relied on the promise and changed his or her
position in life.
3. The injustice can only be avoided by
enforcing the contract.