1. Section 8.2

2. What You’ll Learn
How to identify agreements that are enforceable without consideration (p. 173)
How to explain the legal concept of promissory estoppel (p. 175)

3. What You’ll Learn
How to identify agreements that are not enforceable without consideration (p. 176)
How to distinguish between past consideration and preexisting duties
(p. 177)

4. Why It’s Important
Understanding the difference between contracts that require consideration and those that do not, will enable you to avoid common problems associated with consideration or the lack thereof.

5. Legal Terms
seal (p. 173)
promissory estoppel (p. 175)
option (p. 176)
firm offer (p. 176)
illusory promise (p. 177)
past consideration (p. 177)
preexisting duty (p. 177)

6. Section Outline Enforceable Agreements without Consideration
Promises under Seal
Promises after Discharge in Bankruptcy
Debts Barred by Statutes of Limitations
Promises Enforced by Promissory Estoppel
Option

7. Section Outline Unenforceable Agreements without Consideration
Illusory Promises
Future Gifts
Past Consideration
Preexisting Duties
Promise to Attend a Social Engagement

8. Pre-Learning Question
Do you think any agreements would be enforceable without consideration? Why or why not?

9. Enforceable Agreements without Consideration
Some courts have eliminated the requirement of consideration in certain agreements.

10. Enforceable Agreements without Consideration
These exceptions are allowed by state statute or because the courts, in the interest in fairness or justice, find it inappropriate to require consideration.

11. Enforceable Agreements without Consideration
Some common agreements in this category include:
Promises under seal
Promises after discharge in bankruptcy

12. Enforceable Agreements without Consideration
Debts barred by the statute of limitations
Promises enforced by promissory estoppel
Options

13. Promises under Seal
A seal is a mark or impression placed on a written contract indicating that the instrument was executed and accepted in a formal manner.

14. Promises under Seal
Today most states that require a seal will permit the seal to be indicated by the addition of seal or L.S. (locus sigilli, which translates to “place of the seal”).

15. Promises after Discharge
in Bankruptcy
A person who has had his or her debts discharged in bankruptcy can reaffirm the debt, which means he or she has decided to pay the debt voluntarily.

16. Promises after Discharge
in Bankruptcy
Under most state laws, no new consideration needs to be provided in support of this reaffirmation. Instead, the reaffirmation must be supported by contractual intent.

17. Debts Barred by Statutes
of Limitations
A statute of limitations establishes the time frame within which a party is allowed to bring suit. Different states set different time limits for the collection of a debt.

18. Debts Barred by Statutes
of Limitations
No new consideration is needed for a debtor to reaffirm a debt barred by the statute of limitations.

19. by Promissory Estoppel
Promises Enforced
by Promissory Estoppel
Under promissory estoppel, a promise may be enforceable without consideration.

20. by Promissory Estoppel
Promises Enforced
by Promissory Estoppel
Promissory—containing or consisting of a promise.
Estoppel—restraint on a person to prevent him or her from contradicting a previous act.

21. by Promissory Estoppel
Promises Enforced
by Promissory Estoppel
The doctrine is used to prevent injustice when a person changes his or her position significantly in reliance on another person’s promise and the promise is not fulfilled.

22. of Promissory Estoppel
The Elements
of Promissory Estoppel
Three conditions must be met before the courts will apply this principle.
The promise must be made to bring about action or forbearance by another person who gave no consideration.

23. of Promissory Estoppel
The Elements
of Promissory Estoppel
The one who gave no consideration must have relied on the promise and changed his or her position in a significant way.
Injustice can be avoided only by enforcing the agreement.

24. Option
When an offeree gives consideration to an offeror in exchange for a promise from the offeror to keep an offer open for a specified period of time, this is known as an option.

25. Option
When a merchant makes a written offer stating a period of time during which an offer will remain open, consideration is not needed.
The offer is called a firm offer, or an irrevocable offer.

26. Pre-Learning Question
What do you think an illusory
promise is?

27. Unenforceable Agreements without Consideration
There are certain promises that the courts will not enforce because they lack even the most basic qualities of valid consideration.

28. Unenforceable Agreements without Consideration
Included in this category are:
Illusory promises
Promises of future gifts
Promises of legacies

29. Unenforceable Agreements without Consideration
Promises based on past consideration
Promises based on preexisting duties
Agreements to attend social engagements

30. Illusory Promises
For a binding contract to be formed, both parties must be under an obligation to do something.
If this is not the case, then neither party is bound to do anything.

31. Illusory Promises
Some contracts appear to be contracts but on further scrutiny are revealed to be hollow.
Such an agreement is said to involve illusory promises.

32. Future Gifts
If a person promises to bestow a gift at some future time or in a will, that promise is not enforceable if no consideration is given for the promise.

33. Past Consideration
The act of giving or exchanging benefits and detriments must occur when a contract is made.

34. Past Consideration
Past consideration, or consideration that took place in the past or that is given for something that has already been done, is not regarded as legal by the courts.

35. George Whitehead had an agreement with Main Street Pharmacy to perform for $10 per hour any maintenance that the pharmacy might need for the next two years.

36. What type of agreement does Whitehead and Main Street Pharmacy have?

37. ANSWER
An illusory promise

38. Preexisting Duties
If a person is already under a legal obligation to do something, a promise to do that same thing is not consideration.
These obligations are called preexisting duties.

39. Promise to Attend a Social Engagement
An agreement to meet a friend for lunch or another social engagement would not be a legally binding agreement because the friend has given nothing in exchange for the promise.

40. Reviewing What You Learned
Section 8.2 Assessment
Reviewing What You Learned
What agreements are enforceable without consideration?

41. Reviewing What You Learned Answer
Section 8.2 Assessment
Reviewing What You Learned
Answer
Promises under seal, promises after discharge in bankruptcy, debts barred by the statute of limitations, promises enforced by promissory estoppel, and options.

42. Reviewing What You Learned
Section 8.2 Assessment
Reviewing What You Learned
What is the legal doctrine of promissory estoppel?

43. Reviewing What You Learned Answer
Section 8.2 Assessment
Reviewing What You Learned
Answer
A promise may be enforceable without consideration; used to prevent injustice when a person changes his or her position significantly in reliance on another’s promise, and the promise is not fulfilled.

44. Reviewing What You Learned
Section 8.2 Assessment
Reviewing What You Learned
What agreements are not enforceable without consideration?

45. Reviewing What You Learned Answer
Section 8.2 Assessment
Reviewing What You Learned
Answer
Illusory promises, promises of future gifts, promises of legacies, promises based on past consideration, promises based on preexisting duties, and agreements to attend social engagements.

46. Reviewing What You Learned
Section 8.2 Assessment
Reviewing What You Learned
What is the difference between past consideration and preexisting duties?

47. Reviewing What You Learned Answer
Section 8.2 Assessment
Reviewing What You Learned
Answer
Past consideration is consideration given in the past or given for something already done. A preexisting duty is an obligation a person already has and cannot serve as consideration.

48. Critical Thinking Activity Public Policy
Section 8.2 Assessment
Critical Thinking Activity
Public Policy
Why does the law support the doctrine of promissory estoppel?

49. Critical Thinking Activity Answer Public Policy
Section 8.2 Assessment
Critical Thinking Activity Answer
Public Policy
Answers should recognize that the doctrine of promissory estoppel is used to prevent injustice when a person changes his or her position significantly in reliance on another person’s promise, and the promise is not fulfilled.

50. Legal Skills in Action Promissory Estoppel
Section 8.2 Assessment
Legal Skills in Action
Promissory Estoppel
Your cousin, Geri, has just called you from California.

51. Legal Skills in Action Promissory Estoppel
Section 8.2 Assessment
Legal Skills in Action
Promissory Estoppel
She recently quit her job, broke the lease on her apartment, emptied her bank account to buy a used car, and moved to California because a movie producer promised her a job.

52. Legal Skills in Action Promissory Estoppel
Section 8.2 Assessment
Legal Skills in Action
Promissory Estoppel
Now in California, she realizes that the job offer was an empty promise. Write a letter to the producer in which you explain how the doctrine of promissory estoppel applies in this situation.

53. Legal Skills in Action Answer
Section 8.2 Assessment
Legal Skills in Action Answer
Promissory Estoppel
Answers will vary, but should relate the elements of promissory estoppel to these circumstances.

54. End of Section 8.2