Transcript Chapter-8 Consideration

Chapter 8:
Consideration
CHAPTER 8:
CONSIDERATION
By: Mike Francini, Tasia Gorski, Caitlin McNamara, &
Sam Zangara
Vocabulary
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Consideration- what a person demands and generally
must receive in order to make his/her promise legally
binding.
Gift- a transfer of ownership without receiving anything in
return.
Donor- a person giving gift.
Donee- a person receiving the gift.
Forbearance- refraining from doing what one has a right
to do
More Vocabulary…
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Promisor- a person promising an action or forbearance
Promisee- a person to whom the promise is made
Legal Value- a change in a party’s legal position as a result
of the contract
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Nominal Consideration- the token amount identified in a
written contract when parties either cannot or do not wish
to state the amount precisely
Key Concepts
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Requirements
Each party must promise, perform an act, or forbear.
 Each promise, action, or forbearance must be in exchange for
a return promise, action, or forbearance.
 Must have legal value (worth something in eye’s of the law).
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Circumstantial Consideration: certain forms of
consideration only legally binding in the proper
circumstances.
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Ex: Illusory promises (anything that allows you to escape legal
obligation, ie termination clauses), existing legal and/or
contractual duty (public and private).
False Consideration
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Certain acts or promises are falsely identified as
consideration but never can be.
Mutual Gifts
When something of value is given by one party to another
without demanding anything in return.
 When this occurs, that something of value is not
consideration for anything later promised/provided.
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Past Performance (act already performed)
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Since contractual bargaining (for immediate or future
performance by both parties) takes place in the present, past
performance (also known as past consideration) cannot serve
as consideration.
Exceptions
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Promises made to charitable organizations
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Promises covered by UCC
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Firm offers
Modification
Promises to renew debt barred from collection by certain
statutes.
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Churches, schools, non-profit hospitals
Pledges or completed gifts
Statute of limitations, debts discharged in bankruptcy.
Promises enforceable under doctrine of promissory estoppel
(prevents promisors from stating in court that they didn’t
receive consideration for their promises).
Conditions for Promissory Estoppel
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Promisor should reasonably forsee that promisee will
rely on promise.
Promisee does act in reliance on promise.
Promisee would suffer substantial economic loss if
promise not enforced.
Injustice can be avoided only by enforcement of
promise.