Exam 10: Consideration

Legal sufficiency of consideration is distinct from adequacy of consideration.

Consideration is the value given in return for a promise or in return or a performance.

Kris buys Liz's house for $300,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kris's consideration

Forbearance is undertaking an action that one has a legal right to undertake.

Essentially, adequacy of consideration concerns the fairness of the bargain.

Fact Pattern 10-1 Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot. Refer to Fact Pattern 10-1. Tasty's forbearance from towing is legally sufficient consideration

Adequacy of consideration refers to "how much" consideration is given.

Fact Pattern 10-4  Rex contracts with Spicy Pizza to deliver its products. Later, both parties inform each other that they would like to cancel the contract. Refer to Fact Pattern 10-4. Rex and Spicy

For an accord and satisfaction to occur, the amount of a debt must be in dispute.

Consideration refers to the time that a party takes to evaluate a deal.

Fact Pattern 10-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. Refer to Fact Pattern 10-2. "Adequacy" of consideration refers to

Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Agency, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is

Business Center Inc. and Catering LLC have an executory contract. They agree to rescind it and simultaneously enter into a new contract. If the previous contract was subject to a preexisting duty, the new contract will most likely be

Consideration refers to the serious thought that underlies a party's intent to enter into a contract.

Cloud Storage Inc. promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is

An accord and satisfaction is an agreement in which one party gives up the right to pursue a legal claim against another party.

Fact Pattern 10-5 Brick and Carmen are in an auto accident. Brick offers Carmen $2,000 if she promises not to pursue her potential legal claim against Brick. Carmen agrees. Later, Carmen discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury. Refer to Fact Pattern 10-5. The agreement between Brick and Carmen is

Sean promises to pay his personal assistant Terry $50,000 in consideration of the services she provided over the years. Sean never makes the payment. Sean's promise is

An obligation is enforceable only if it is made in return for actions or events that have already taken place.

Ethan is indebted to Finance Credit Corporation for $100,000. Ethan agrees to pay, and Finance Credit agrees to accept, a lesser amount than the creditor originally claimed was owed. This agreement is