1. Consideration

2. The Opening Scene, pg. 163  Jake  Alena  Arkadi  Viktor  Jessica

3. Bell Ringer consideration  What did you think the word consideration meant before learning about it in this class?

4. The Opening Scene, pg. 163 When is a contract sealed with consideration? A contract is sealed with consideration when each party gains something and gives up something of value Does the law permit past actions to serve as consideration in a new contract? not The law does not permit past actions to serve as consideration in a new contract Is there any recourse in the law when people disagree on the amount owed in a contractual situation? Accord and satisfaction may solve the problem when people disagree on the amount owed in a contractual situation Are promises to fulfill social engagements supported by consideration? Promises to fulfill social engagements are NOT supported by consideration

5. Requirements of Consideration LAW gratuitous  The LAW will always refused to enforce most gratuitous, of free agreements.  WHY? All agreements must be bargained for if they are to be binding on the parties…

6. Consideration Requirements Terms must be bargained!  To be binding on the parties: Terms must be bargained!  An agreement is bargained when:  An agreement is bargained when: something of value is given up for something else of value This is what binds parties in a contractual relationship consideration This is commonly referred to as: consideration

7. Consideration  Consideration: The exchange of benefits and detriments by parties to an agreement ○ Benefit: Something that a party was not previously entitled to receive ○ Detriment: Any loss suffered The law has always refused to enforce most “gratuitous” or free agreements.

8. Types of Consideration Type 1 -Involves giving up or promising to give up something you have the legal right to keep. Type 2- Involves doing something or promising to do something that you have a legal right to do Type 3- Known as “Forebearance”, is not doing something that you have the legal right to do

9. 3 Key Characteristics of Consideration Promise involving the concept of a “bargained-for exchange” Defined: When a promise is made in return for another promise, an act, or a promise not to act ○ Example: You made arrangement to borrow your friend’s bike, there is no understanding that you would pay for the use, your friend decides not to let you use it… Hence, no bargained-for exchange, means NO Contract!

10. 3 Key Characteristics of Consideration Something of value 1. There is no specific value requirements to consideration. a) A promise to help you clean your friend’s room can be considered “something of value” b) Goods and services do not have to be the same as market value c) Courts can rule consideration is “Unconscionable”, meaning contract is completely out of line All that matters is that the parties agreed freely on the value and the price

11. 3 Key Characteristics of Consideration Legality of consideration a) Court requires all consideration in an agreement be legal b) If the consideration is illegal, then the contract is invalid c) Parties cannot agree to do something they have no legal right to do d) Also can’t give up something they do not legally own or have a right too

12. Types of Consideration Commonly Used to Secure a Contract  Money Some limits: administrative regulations Rent, fuel, oil, and natural gas  Property Exchange one comic book for another  Services Do one thing for another

13. Class Project  List some examples of commonly used consideration in today’s legal environment?

14. Types of Consideration Commonly Used to Secure a Contract  Promises not to sue  Promises not to sue (Ex. 2, pg. 168) Women was eating lunch at Martini’s She had tuna and immediately got ill She went to hospital and was diagnosed with food poisoning from improperly refrigerated seafood She sued the restaurant for failure to refrigerate the tuna properly Martini’s offered her $5,000 if she would drop lawsuit

15. Types of Consideration Commonly Used to Secure a Contract  Charitable pledges  Charitable pledges (Ex. 3, pg. 169) Saint Carmela’s Church announced to the parish they were beginning a campaign to re-roof the church Parishioners pledged more than $12,000 Relying on these pledges, the church began work on the roof At this point each pledge becomes an enforceable agreement, no matter how small

16. Problems with Consideration  Parties involved in contracts sometimes disagree over the amount of consideration of the contract  Disputed amounts can be settled by accord and satisfaction Accord: Acceptance of less than amount owed by creditor Agreed-to-settlement contained in the accord is…. Satisfaction:

17. Problems with Consideration  Undisputed amounts can not be disputed if the parted have mutually agreed to a set amount of money  ALL disputes must be: Real Real Occur in good faith Occur in good faith Not be trivial Not be trivial

18. Class Work  Vocabulary – Chapter 8, Section 1

19. Concept Review  Law Class Blog Chapter 8  POP QUIZ ---- 3 Questions  Be thorough and complete!

20. Agreements Without Consideration

21. Introducing the Section  Did you ever do something based on a promise someone made to you?  Did you ever quit a job because someone promised a better one?

22. Enforceable Agreements Without Consideration  Promises under seal  Promises after discharge in bankruptcy  Debts barred by the statute of limitations  Promises enforced by promissory estoppel  Options

23. Enforceable Agreements Without Consideration  These are Enforceable Agreements without Consideration because: They are allowed by state statute, or because courts, in the interest of justice and fairness, find it inappropriate to require consideration

24. Enforceable Agreements Without Consideration  Promises under seal Mark or impression indicating that the instrument was formally accepted ○ Common in contracts, also know as “Notary Seals”  Promises after discharge in bankruptcy Court hearings must be held ○ Debtors must be informed of legal consequences of assuming debt  Debts barred by the statute of limitations Statute of limitations for lawsuits ○ Two years

25. Promissory Estoppel When someone intends a gift but consideration in not present, a promise may be enforced under the doctrine of Promissory Estoppel  These conditions must be met: The promisor should reasonably foresee that the promisee will rely on the promise. The promisee does, in fact, act in reliance on the promise. The promisee would suffer a substantial economic loss if the promise in not enforced Injustice can be avoided only by enforcement of the promise  Promissory Estoppel – “the court will ‘estop’ or barred the person who made the promise from claiming that there was no consideration

26. Promissory Estoppel  Promissory – “containing or consisting of a promise”  Estoppel – “restraint on a person to prevent him or her from contradicting a previous act”  Promissory Estoppel – “the court will ‘estop’ the person who made the promise from claiming that there was no consideration

27. Unenforceable Agreements Without Consideration  Why are they unenforceable? The courts find these lack even the most basic qualities of valid consideration.

28. Unenforceable Agreements Without Consideration  Illusory Promises Example 7, pg. 177  Future Gifts  Past Consideration Example 8, pg. 177  Preexisting Duties Example 9, pg. 178 Discussion Starter

29. Unenforceable Agreements Without Consideration  Illusory Promises Meaning they appear at first glance to be contracts but on further scrutiny are revealed to be hollow ○ John and Paul reach an agreement that John will sell Paul any apples that he might need over a three month period. ○ They develop a price for this time frame ○ However, because Paul might not order any apples within the next three month, he is not bound to do anything

30. Unenforceable Agreements Without Consideration  Future Gifts Person promises to bestow a gift at some future time or in a will, that promise is not enforceable  Past Consideration The act of giving or exchanging benefits or detriments must occur when a contract is made. Past consideration, taken in the past is not regarded as legal by the courts

31. Unenforceable Agreements Without Consideration  Preexisting Duties If a person is already under legal obligation to do something, a promise to do that same thing is not consideration  Promise to Attend a Social Engagement All contracts are agreements, but not all agreements are contracts An agreement to meet for lunch would not be binding if the friend gave nothing in exchange for the promise

32. Classwork  Finish Packet  Exam on Wednesday