1. Consideration Objective 3.01 Chapter 8 – Page 173

2. We are completing Consideration today… Offer Acceptance Genuine Agreement Capacity Consideration Legality

3. Consideration - Review Consideration: Exchange of benefits and detriments by the parties to an agreements –Benefits: Something that a party was not previously entitled to receive –Detriments: Any loss suffered The law does not enforce any contracts that are gratuitous Gratuitous contracts are free agreements

4. 3 Categories of Consideration 1.Promise - Give up or promise to give up something you are entitled to receive 2.Act - Doing or promising to do something you have a legal right to do 3.Forbearance - Not doing something you have a legal right to do

5. 3 Requirements of Consideration (Page 164) 1.Bargained-for Exchange 2.Something of Value 3.Legal

6. Agreements without Consideration Promise to make a gift –Gifts have no consideration & Cannot be enforced Gift that has been given? –Doesn’t have to be returned –Donor – Gives the gift & Donee – Accepts the gift Promise to obey the law –No detriment & You are obligated to obey the law Preexisting Duty –If a person is already under legal duty to do something, a promise to do that same thing does not furnish consideration

7. Adequacy of Consideration Courts don’t look at adequacy or value of an agreement unless it is unconscionable Unconscionable? –So lopsided that the average person would not agree to terms

8. Agreements In most situations, a contract is invalid if it does not include consideration. However, there are some agreements in which the consideration is eliminated. Some courts have chosen to eliminate the consideration requirement in certain kinds of agreements. An agreement is not dependent on contract; But a contract is dependent on agreement. Two types of Agreements: Enforceable Agreement Unenforceable Agreement

9. 4 Enforceable Agreements Promises under seal Promises after discharge of bankruptcy Debts barred by the statutes of limitations Promises enforced by promissory estoppel

10. Enforceable Agreements – Page 173 Promises under seal – A seal is a mark or an impression placed on a written contract indicating that the instrument was executed and accepted in a formal manner. Promises after discharge in bankruptcy – Under most state laws, no new consideration needs to be provided to reaffirm a contract to pay a debt eliminated during bankruptcy. Court hearings must be held when those who go through bankruptcy (debtor) decide to voluntarily repay debts…to insure understanding/intent.

11. Enforceable Agreements – Page 173 Debts barred by Statutes of Limitations – Different states set different time limits for the collection of debt. The partial payment of the debt after this time will result in affirmation of the debt. Promises enforced by Promissory Estoppel…

12. Promissory Estoppel Rely on what a person said. Promissory – Promise; Estoppel – preventing from contradicting previous act Elements: –Promise must bring action or forbearance by party who gave no consideration –Party who gave no consideration must have relied on the promise –Injustice can be avoided only enforcing the promise Example: Page 176

13. Promissory Estoppel – More Examples Example 1: A city entered into a contract with another party. The contract stated that it had been reviewed by the city's counsel and that the contract was proper. Promissory estoppel applied to estop the city from claiming the contract was invalid. Example 2: The creditor unofficially informs the debtor that the creditor forgives the debt. Even if such forgiveness is not formally documented, the creditor may be estopped from changing its mind and seeking to collect the debt, because that change would be unfair. Example 3: A landlord informs a tenant that rent has been reduced, for example, because there was construction or a lapse in utility services. If the tenant relies on this notice, the landlord could be estopped from collecting the full rent.

14. Unenforceable Agreements – Page 177 Illusionary Promises Past Consideration –Consideration cannot already have been completed Promise to attend a social agreement –No consideration –However, in some instances (prom) there may be grounds for a lawsuit You must show a loss –Exception: Prom

15. What is this UCC? Universal Commercial Code (UCC) A set of statutes that covers the law of sales as well as other areas of commercial law. Drafted to make trade among the states easier and has been adopted with minor variations by 49 states. Only Louisiana has not adopted all of its provisions. The goal of harmonizing state law is important because of the prevalence of commercial transactions that extend beyond one state. For example, goods may be manufactured in State A, warehoused in State B, sold from State C and delivered in State D. The UCC therefore achieved the goal of substantial uniformity in commercial laws and, at the same time, allowed the states the flexibility to meet local circumstances. The UCC deals primarily with transactions involving personal property (movable property), not real property (immovable property).