Final Exam (BCOR 2301) WITH 100% VERIFIED SOLUTIONS

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.