Final Exam (BCOR 2301) Already Passed Consideration The value given in return for a promise or performance in a contractual agreement.
1. Something of LEGALLY SUFFICIENT VALUE must be given in exchange for the promise.
2. There must be a BARGAINED-FOR-EXCHANGE.
Legal Sufficient Value Something o...
consideration the value given in return for a promise or performance in a contractual agreement
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Final Exam (BCOR 2301) Already Passed
Consideration ✔✔The value given in return for a promise or performance in a contractual
agreement.
1. Something of LEGALLY SUFFICIENT VALUE must be given in exchange for the promise.
2. There must be a BARGAINED-FOR-EXCHANGE.
Legal Sufficient Value ✔✔Something of value in the eyes of the law; may be:
- Promise [to do something]
e.g. pay supplier upon receiving goods
- Performance [of an action otherwise not obligated to]
e.g. providing acct. services
- Forbearance [refraining from doing something]
e.g. purchasing from another supplier
,Hamer v. Sidway ✔✔Facts: A man promised his nephew that if he stopped drinking, smoking,
and gambling until he was 21 that he would pay him $5000. When the nephew completed this
agreement the uncle told him that he would hold onto the money and let it collect interest.
When the uncle died Sidway, the executor to the uncles estate, would not pay the money to
Hamer because he did not have consideration.
Issue: Did the original agreement show any consideration? In an agreement one must give up
something.
Decision: The court ruled in favor of Hamer because the legal rights given up by the nephew are
enough to satisfy consideration.
Bargined-For-Exchange ✔✔The basis for a bargain struck between or among the contracting
parties.
Distinguishes contracts from gifts.
,Consideration: Adequacy ✔✔Involves "how much" consideration is given; measuring whether
bargain was fair.
See Freedom of Contract.
Freedom of Contract ✔✔Fundamental public policy recognizing one's ability to enter freely into
contractual arrangements.
Examples where Consideration is lacking: ✔✔Preexisting Duty
Rescission
Past Consideration
Illusory Promise
Preexisting Duty ✔✔A duty that one is already legally obligated to perform and, thus, that is
generally not recognized as a legal detriment.
Does not constitute legally sufficient consideration; prevents against extortion.
, Rescission ✔✔A remedy whereby a contract is canceled and the parties are returned to the
positions they occupied before the contract was made.
Past Consideration ✔✔Promises made in return for actions or events that have already taken
place are unenforceable.
Bargained-for-exchange is missing.
e.g. companies which attempt to impose a non-compete covenant upon an existing employee
Illusory Promise ✔✔A statement that looks like a promise but is actually only an illusion of a
promise due to its conditional nature or its otherwise lack of a firm commitment.
Accord and Satisfaction ✔✔A common means of settling a disputed claim, whereby a debtor
offers to pay a lesser amount than the creditor purports to be owed.
See Accord and Satisfaction.
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