CHAPTER 8 CONSIDERATION

Transcription

1 CHAPTER 8 CONSIDERATION 1

2 CONSIDERATION Exchange of benefits and detriments by parties to an agreement (ex: money, property, services, promise not to sue, charitable pledges) What did YOU give up? What did the OTHER PARTY give up? 2

3 BARGAIN THEORY Legal Benefit Something that a party was not previously entitled to receive. Legal Detriment Any loss suffered. ERIC AGREES TO SELL HIS ipod TO GREG FOR $200. GREG AGREES TO BUY IT FOR THAT PRICE. 1) Promise for a promise is a contract. 2) Each promise is 3) For Eric: legal benefit is legal detriment is 4) For Greg: legal benefit is legal detriment is 3

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5 WHAT DID YOU GIVE? WHAT DID THE OTHER PERSON GIVE? 5

6 CONSIDERATION IN A UNILATERAL CONTRACT 1. Promise for an act (unilateral contract) 2. Promise in exchange for a forbearance to act. -- FORBEARANCE NOT doing something you a legal right to do. Stephanie has agreed to forbearance (not doing something she has a legal right to do--call the police, report an accident, and call her insurance company) in exchange for Kayla s promise to fix the car door she dented. 6

7 CONSIDERATION IN BILATERAL CONTRACT BILATERAL Promise for a promise 7

8 WHAT DO YOU LOOK FOR IN A BILATERAL CONTRACT? MUTUAL PROMISES EXAMPLE: I promise to pay you $5 if you promise to sell me your pencil. Promisor: benefit pencil; detriment- $5 Promisee: benefit $5, detriment pencil WHAT DO WE LOOK FOR? WHAT DID YOU GIVE? WHAT DID THE OTHER PERSON? 8

9 RULE ON GIFTS Once a gift is freely given, it is yours. 1. Donative Intent Knew from onset the person was going to give you a gift for free (ex: birthday present.) 2. Delivery You got the gift. 3. Acceptance You accepted the gift. A GIFT IS SOMETHING THAT IS GIVEN FREELY WITHOUT CONSIDERATION. 9

10 REQUIREMENTS FOR VALID CONSIDERATION 1. Must create a new enforceable agreement (cannot expect more for something you already do) Hamer vs. Sidway, Must be legal (cannot be illegal) Rachel vs. Boston Binding agreement 3. Must be possible (no consideration for the impossible) 4. Must support an existing promise (Past consideration is no consideration) Mills vs. Wyman, Must have value (Value does not have to be equal) 10

11 IN REVIEW: 1. WHAT ARE THE THREE RULES ON GIFTS? 2. FIVE REQUIREMENTS OF CONSIDERATION ARE? 3. LEGAL BENEFIT IS.? 4. LEGAL DETRIMENT IS.? 5. IN ANY CONTRACT, ASK YOURSELF WHAT? 6. PAST CONSIDERATION IS WHAT? 7. YOU SAVE A LIFE AND A FAMILY MEMBER SAYS THEY WILL PAY YOU $1,000 AS A THANK YOU...THEY DON T FOLLOW THROUGH, CAN YOU SUE? WHY? 11

12 ILLUSORY PROMISE Ex: A promise courts will not enforce: false appearance, generally lacking consideration At first look, contract appears binding to both parties, but a closer look reveals it is not. I will pay you $100 if I feel like it. Ex: Doug promises to manufacture, sell, and deliver shoes in whatever amount Courtney desires to buy. ILLUSORY PROMISES? WHAT DID PROMISOR GIVE UP? WHAT DID PROMISEE GIVE UP? IS THIS A BINDING CONTRACT? WILL THE COURTS ENFORCE THESE CONTRACTS? 12

13 UNCONSCIONABILITY aka Unconscientious Dealings A contract is so one-sided that it is unreasonably favors one party over another. Appeal to the courts for a sense of fair play. TV SET 3 yr. 2 yrs. later Retail $500 Installment plan Paid $600 Wholesale $300 $700 Owe $100 13

14 CHARITABLE SUBSCRIPTION RULE Designed for protection of charitable organizations The charity must prove it relied upon the pledge is some way or they do NOT get the money. If prove their case: enforceable unilateral contact Lipsky vs. United Jewish Appeal 14

15 PART PAYMENT OF A DEBT 1. LIQUIDATED DEBT NOT IN DISPUTE Ex: John knows he owes me $10, I know John owes me $10 1. UNLIQUIDATED DEBT IN DISPUTE Courts encourage compromise. Ex: John thinks he owes me $100 I think John owes me $150 15

16 SETTLEMENT OF DISPUTED DEBTS ACCORD agreement to discharge obligation SATISFACTION legal consideration that binds the parties to the agreement Accord and Satisfaction $100 $90 $95 One contract substituted for another contract Ex: I owe $100, you thought $90, compromise at $95 16

17 CHECK CASHING RULE PAYMENT IN FULL IF SOMEONE SENDS YOU A CHECK THAT IS NOT FOR FULL PAYMENT, YOU CASH CHECK YOU ACCEPT PARTIAL PAYMENT AS PAYMENT IN FULL. Ohio Law With Prejudice Under Protest IF SOMEONE SEND YOU A CHECK THAT IS NOT FOR FULL PAYEMENT, BEFORE YOU SIGN IT, YOU WRITE WITH PREJUDICE OR UNDER PROTEST: YOU RESERVE RIGHT TO GO AFTER ADDITONAL FUNDS IN COURT. With prejudice Jane E. Doe 17

18 PROMISES ENFORCEABLE WITHOUT CONSIDERATION A NEW PROMISE TO PAY AN OLD DEBT BARRED BY: a. Bankruptcy b. Statute of Limitations 18

19 PROMISES ENFORCEABLE WITHOUT CONSIDERATION (CONT) A NEW PROMISE TO PAY AN OLD DEBT BARRED BY: Bankruptcy Don t make promises to pay an old debt discharged through bankruptcy you will be held to it in a court of law. 19

20 PROMISES ENFORCEABLE WITHOUT CONSIDERATION (CONT) A NEW PROMISE TO PAY AN OLD DEBT BARRED BY: Statute of Limitations TIME LIMITS ON CREDIT CARDS: 4 YEARS UNLESS YOU PROMISE or PRESENT OLD BILL FOR PAYMENT 20