Consideration by alicejenny

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									          Chapter 14



        Consideration


 Twomey, Business Law and the
Regulatory Environment (14th Ed.)
             The Nature of Consideration [14-1]
       Contract for the sale of a Ford Torino by Jake Plumber to Tom Irvin for $1272
                                             $1272
        benefit                                                                   detriment
     Jake Plumber                                                                  Tom Irvin
        detriment                                                                   benefit
                                         Ford Torino
                         Loan by Bank Two to Tom Irvin for purchase of Ford Torino
                                 Repayment of $1272 plus 8% interest
        benefit                                                                  detriment
       Bank Two                                                                    Tom Irvin
        detriment                                                                   benefit
                                        $1272
             Gift of Ford Torino by Tom Irvin to his sister Becky, as a graduation gift
                                           none
         benefit                                                          detriment
        Tom Irvin                                                          Becky Irvin
                                                                            benefi
        detriment
                                            Ford Torino                       t
                                A gift does not have consideration.
                            A promise to make a gift is not enforceable.

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              Consideration and Promises
                   Consideration as the Price
          Act                Promise                     +     The Promise            Binding
                   To Act         To Forbear



                 Exceptions to Consideration
                    Charitable Subscription
                   Uniform Commercial Code
                 Sealed and Written Instruments
                      Promissory Estoppel



                What Is Not Consideration
                     Unrequested Benefit                                     Not Binding
            Promise to Perform Existing Obligation
                       Moral Obligation
                     Illegal Consideration



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                         Chapter 14 Summary

  A promise is not binding if there is no consideration for
  the promise. Consideration is what the promisor
  requires as the price for the promise. That price may be
  doing an act, refraining from the doing of an act, or
  merely promising to do or to refrain. In a bilateral
  contract, it is necessary to find that the promise of each
  party is supported by consideration. If either promise is
  not so supported, it is not binding, and the agreement of
  the parties is not a contract.


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                         Chapter 14 Summary [2]

  Consequently, the agreement cannot be enforced. When
  a promise is the consideration, it must be a binding
  promise. The binding character of a promise is not
  affected by the circumstance that there is a condition
  precedent to the performance promised. Likewise, the
  binding character of the promise and of the contract is
  not affected by a provision in the contract for its
  cancellation by either one or both of the parties.



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                         Chapter 14 Summary    [3]


  A promise to do what one is already obligated to do is
  not consideration, although some exceptions are made.
  Such exceptions include the rendering of a partial
  performance or a modified performance accepted as a
  good-faith adjustment to a changed situation, a
  compromise and release of claims, a part-payment
  check, and a compromise of creditors.




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                         Chapter 14 Summary       [4]


       Because consideration is the price that is given to
       obtain the promise, past benefits conferred on the
       promissor cannot be consideration. In the case of a
       complex transaction, however, the past benefit and
       the subsequent transaction relating to the promise
       may in fact have been intended by the parties as one
       transaction. In such a case, the earlier benefit is not
       past consideration but is the consideration
       contemplated by the promissor as the price for the
       promise subsequently made.


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                         Chapter 14 Summary    [5]


     A promise to refrain from doing an act can be
     consideration. A promise to refrain from suing or
     asserting a particular claim can be consideration.
     Generally, the promise to forbear must be for a
     specified time as distinguished from agreeing to
     forbear at will. When consideration is forbearance to
     assert a claim, it is immaterial whether the claim is
     valid as long as the claim has been asserted in good
     faith in the belief that it was valid.


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                         Chapter 14 Summary    [6]



  When the promissor obtains the consideration
  specified for the promise, the law is not
  ordinarily concerned with the value or adequacy
  of that consideration. Exceptions are sometimes
  made in the case of fraud or unconscionability
  and under consumer protection statutes.




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                         Chapter 14 Summary    [7]


  There is a current trend to abandon the
  requirement of consideration, with promissory
  estoppel the most extensive repudiation of that
  requirement.

  All transactions must be lawful; therefore,
  consideration for a promise must be legal. If it is
  not, there is no consideration, and the promise is
  not binding.

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                         Chapter 14 Summary    [8]



     When the promissor does not actually receive
     the price promised for the promise, there is a
     failure of consideration, which constitutes a
     breach of the contract.




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                         Chapter 14 Summary    [9]


  Although consideration is required to make a promise
  binding, the promise that is not supported by
  consideration is not unlawful or illegal. If the promissor
  voluntarily performs the promise, the promissor cannot
  undo the performance and restore matters to their
  position prior to the making of the agreement. The
  parties are free to perform their agreement, but the
  courts will not help either of them because there is no
  contract.


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