Chapter 11 and Promissory

25-1 Consideration

§ Consideration: something of legal value given in exchange for a promise § Necessary for the existence of a § Elements: § Something of legal value must be given § There must be a bargained-for exchange

11-2 Consideration

§ Legal value § A contract is considered supported by legal value if: § The promisee suffers a legal detriment § The promisor receives a legal benefit § Most commonly involves tangible payment or performance of an act

11-3 Consideration

§ Bargained-for exchange § Process of bargaining or inducement that leads to an enforceable contract § Naturally present in most commercial transactions

11-4 Case 11.1: Consideration

§ Case § In The Matter of Wirth § 14 A.D.3d 572, 789 N.Y.S.2d 69, Web 2005 N.Y. App. Div. Lexis 424 (2005) § Supreme Court of New York, Appellate Division § Issue § Is the pledge agreement supported by consideration and therefore enforceable against the of Wirth?

11-5 Gift Promise

§ Gratuitous promises § Unenforceable due to lack of consideration § Promise freely given and not induced by promise of some benefit § Completed gift promises are not revocable

11-6 Case 11.2: Gifts and Gift Promises

§ Case § Cooper v. Smith § 800 N.E.2d 372, Web 2003 Ohio App. Lexis 5446 (2003) § Court of Appeals of Ohio § Issue § Can Cooper recover the gifts or the value of the gifts he gave to Julie and Janet Smith?

11-7 Promises that Lack Consideration

§ Illegal consideration § Illusory promise § Preexisting duty § Past consideration

11-8 Promises that Lack Consideration

§ Illegal consideration § A promise to refrain from doing an illegal act § Illusory promise § A contract that both parties enter, but one or both of the parties can choose not to perform their contractual obligations

11-9 Promises that Lack Consideration

§ Preexisting duty § A promise to do something the party is already under an obligation to do § arises when one party to an existing contract seeks to change the terms of the contract during the course of its performance

11-10 Promises that Lack Consideration

§ Past consideration § A prior act or performance that does not support a new contract § Problems of past consideration often arise when a party to a contract promises to pay additional compensation for work done in the past

11-11 Special Business

§ : a contract in which the seller agrees to sell all of its production to a single buyer § Purposes § Assuring the seller of a purchaser for all its output § Assuring the buyer of a source of supply for the goods it needs

11-12 Special Business Contracts

§ : a contract in which a buyer agrees to purchase all of its requirements for an item from one seller § Purposes § Assuring the buyer of a uniform source of supply § Providing the seller with reduced selling costs

11-13 Special Business Contracts

§ Best-efforts contract: A contract which contains a clause that requires one or both of the parties to use their best efforts to achieve the objective of the contract

11-14 Settlement of Claims

§ Law promotes voluntary settlement of disputed claims § Saves judicial resources § Serves the interests of the parties entering into the settlement

11-15 Settlement of Claims

§ Accord: an agreement whereby the parties agree to accept something different in satisfaction of the original contract § Satisfaction: the performance of an accord § If the accord is not satisfied, the other party can sue to enforce either the accord or the original contract

11-16 Equity: Promissory Estoppel

§ Promissory estoppel: An equitable doctrine that prevents the withdrawal of a promise by a promisor if it will adversely affect a promisee who has adjusted his or her position in justifiable reliance on the promise § Also known as detrimental reliance

11-17 Equity: Promissory Estoppel

§ Elements to be proven § The promisor made a promise § The promisor should have reasonably expected that promisee would rely on the promise § The promisee actually relied on the promise and engaged in an action or forbearance of a right of a definite and substantial nature § Injustice would result if the promise were not enforced

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