Final Exam (BCOR 2301) 2023 Questions and Answers

Final Exam (BCOR 2301) 2023 Questions and Answers Consideration The value given in return for a promise or performance in a contractual agreement. 1. Something of LEGALLY SUFFICIENT VALUE must be given in exchange for the promise. 2. There must be a BARGAINED-FOR-EXCHANGE. Legal Sufficient Value Something of value in the eyes of the law; may be: - Promise [to do something] e.g. pay supplier upon receiving goods - Performance [of an action otherwise not obligated to] e.g. providing acct. services - Forbearance [refraining from doing something] e.g. purchasing from another supplier Hamer v. Sidway Facts: A man promised his nephew that if he stopped drinking, smoking, and gambling until he was 21 that he would pay him $5000. When the nephew completed this agreement the uncle told him that he would hold onto the money and let it collect interest. When the uncle died Sidway, the executor to the uncles estate, would not pay the money to Hamer because he did not have consideration. Issue: Did the original agreement show any consideration? In an agreement one must give up something. Decision: The court ruled in favor of Hamer because the legal rights given up by the nephew are enough to satisfy consideration. Bargined-For-Exchange The basis for a bargain struck between or among the contracting parties. Distinguishes contracts from gifts. Consideration: Adequacy Involves "how much" consideration is given; measuring whether bargain was fair. See Freedom of Contract. Freedom of Contract Fundamental public policy recognizing one's ability to enter freely into contractual arrangements. Examples where Consideration is lacking: Preexisting Duty Rescission Past Consideration Illusory Promise Preexisting Duty A duty that one is already legally obligated to perform and, thus, that is generally not recognized as a legal detriment. Does not constitute legally sufficient consideration; prevents against extortion. Rescission A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made. Past Consideration Promises made in return for actions or events that have already taken place are unenforceable. Bargained-for-exchange is missing. e.g. companies which attempt to impose a non-compete covenant upon an existing employee Illusory Promise A statement that looks like a promise but is actually only an illusion of a promise due to its conditional nature or its otherwise lack of a firm commitment. Accord and Satisfaction A common means of settling a disputed claim, whereby a debtor offers to pay a lesser amount than the creditor purports to be owed. See Accord and Satisfaction. Accord Agreement under which one party promises to give or perform, and the other party to accept, in satisfaction of a claim, something different from what the parties originally agreed. Satisfaction Performance (usually payment) which takes place after the accord is executed. Liquidated Debt A debt whose amount has been ascertained, fixed, agreed on, settled, or exactly determined. Unliquidated Debt A debt that is uncertain in amount. Release A contract in which one party forfeits the right to pursue a legal claim against the other party. Genererally binding if: 1. Given in good faith.