Contracts Chapter 9: Mutual Consideration
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Questions and Answers

What must be present for a contract to be considered enforceable?

  • Mutual consideration (correct)
  • Gift exchange
  • Social acceptance
  • A unilateral promise

Which of the following constitutes a valid contract?

  • A social promise to do someone a favor
  • An agreement where each party exchanges promises (correct)
  • A promise made without consideration
  • A gift given with the intent to please

Which of these is an example of a gift?

  • Offering a service for money
  • Transferring ownership of an item without expecting anything in return (correct)
  • Making a promise to do something in exchange for something else
  • Paying someone for service

What is the primary difference between a promise and a gift?

<p>A promise involves exchange, while a gift does not (A)</p> Signup and view all the answers

Why is a promise to make a gift generally not enforceable in a legal sense?

<p>Because it lacks mutual consideration (C)</p> Signup and view all the answers

What aspect of trading is highlighted in the context of consideration?

<p>The bargaining of promises (B)</p> Signup and view all the answers

Which action can NOT constitute consideration in a contractual agreement?

<p>A verbal promise without action (D)</p> Signup and view all the answers

What must the promisor reasonably foresee for promissory estoppel to apply?

<p>The promisee will rely on the promise. (D)</p> Signup and view all the answers

Which of the following conditions is NOT required for the enforcement of a promise under the doctrine of promissory estoppel?

<p>The promise must be made in good faith. (C)</p> Signup and view all the answers

What can prevent injustice if a promise is not enforced?

<p>The promise must be fulfilled by the promisor. (A)</p> Signup and view all the answers

In what scenario is a promise to a charitable organization considered to have legal standing?

<p>When the donor intends a gift. (A)</p> Signup and view all the answers

What is the primary outcome when a promise is enforced under the doctrine of promissory estoppel?

<p>The promisor must fulfill their pledge. (C)</p> Signup and view all the answers

Why might a promise to a charitable organization not require consideration?

<p>Charitable contributions are generally made as gifts. (A)</p> Signup and view all the answers

What happens if the promisee does not rely on the promise made by the promisor?

<p>The promisor has no obligation to fulfill the promise. (B)</p> Signup and view all the answers

Which of the following is true regarding charitable pledges?

<p>They can be enforced even without receiving consideration. (A)</p> Signup and view all the answers

What does an implied duty of fair dealings entail in a contract context?

<p>The obligations must be fulfilled in a fair manner. (A)</p> Signup and view all the answers

In Lcmsky's contract with York, what was the initial annual salary offered?

<p>$25,000 (C)</p> Signup and view all the answers

What might happen if business circumstances change according to the passage?

<p>Termination clauses can be invoked. (C)</p> Signup and view all the answers

What is the consequence of promising to do something already obliged by law?

<p>It lacks consideration and legal value. (A)</p> Signup and view all the answers

What was York's response to the competing offer from Fleming?

<p>He informed Lcmsky of the new offer. (A)</p> Signup and view all the answers

Which statement accurately reflects the legal value in the context of the document?

<p>It involves a change in the legal position of a party. (A)</p> Signup and view all the answers

What condition must be met for a termination clause to be valid according to the passage?

<p>It cannot be exercised arbitrarily. (B)</p> Signup and view all the answers

What role does consideration play in York's contract with Lcmsky?

<p>It provides a basis for the contract's existence. (C)</p> Signup and view all the answers

What is the term used to describe a debt for which the exact amount is not yet agreed upon?

<p>Unliquidated debt (C)</p> Signup and view all the answers

What promise was made by Maureen's aunt for her graduation?

<p>Two round-trip tickets for a cruise (A)</p> Signup and view all the answers

What reason might support Maureen's ability to recover the value of the trip?

<p>Her aunt had already booked the tickets. (B)</p> Signup and view all the answers

In the scenario described in the text regarding Shawver and Reno, why is Reno's cashing of the $1,000 check considered binding?

<p>The check included the notation &quot;in full settlement of all claims outstanding.&quot; (C)</p> Signup and view all the answers

What is the legal concept that describes the mutual forbearance from litigating the amount owed in a disputed debt?

<p>Consideration (A)</p> Signup and view all the answers

Why might Maureen's aunt not have to fulfill her promise?

<p>The stock market was down at the time. (A), She did not have sufficient funds available. (C)</p> Signup and view all the answers

What is the role of consideration in a contract?

<p>It is a mutual exchange of value between parties. (D)</p> Signup and view all the answers

What is the legal term for a clause in a contract that allows one party to escape its obligations under certain conditions?

<p>Exculpatory clause (C)</p> Signup and view all the answers

Is a contract invalid for lack of consideration if it includes a termination clause?

<p>False (A)</p> Signup and view all the answers

What does forbearance mean in the context of consideration?

<p>To refrain from doing something. (C)</p> Signup and view all the answers

Which statement best describes a lack of consideration?

<p>Both parties sign a contract without exchanging anything. (D)</p> Signup and view all the answers

Is a contract invalid if it contains an output clause?

<p>False (A)</p> Signup and view all the answers

In the given scenario, what could reinforce the legal value of a promise?

<p>The presence of written documentation of the promise. (C)</p> Signup and view all the answers

What might indicate that the aunt's promise is not legally binding?

<p>There was no actual exchange of value before the promise. (B), The tickets were never booked. (C)</p> Signup and view all the answers

What is the meaning of "legal value" in the context of the provided text?

<p>A change in a party's legal position as a result of a contract. (D)</p> Signup and view all the answers

In the example of the nephew and uncle, why is the uncle's promise of $25,000 considered valid consideration?

<p>The nephew is giving up a legal right to smoke until he's 21. (B)</p> Signup and view all the answers

In the example of picking up mail, what is the legal value for the neighbor who promises to pay $30?

<p>The neighbor benefits from the act of the other person picking up the mail. (D)</p> Signup and view all the answers

In the example of the fence and dog, what is the legal value for the neighbor who forbears building a fence?

<p>The neighbor avoids the cost and effort of building a fence. (A)</p> Signup and view all the answers

In the example of the lampshade, why did Laval initially offer to purchase the lampshade for $150?

<p>Laval genuinely believed the lampshade was worth $150. (A)</p> Signup and view all the answers

Why did Shreve accept Laval's initial offer of $150 for the lampshade?

<p>Shreve believed $150 was a fair price for the lampshade. (B)</p> Signup and view all the answers

Why did Shreve decide to reclaim the lampshade after learning it was worth at least $450?

<p>Shreve felt he didn't receive a fair price for the lampshade, given its actual worth. (C)</p> Signup and view all the answers

What is the primary reason that Shreve decided to reclaim the lampshade?

<p>He was unhappy with the initial deal and felt he had been cheated. (C)</p> Signup and view all the answers

Flashcards

Consideration

Something of value exchanged in a contract, validating it legally.

Legal Value of an Act

The actual worth that an act or promise holds in law.

Forbearance

The act of refraining from doing something that one has the right to do.

Recourse for Unfulfilled Promises

Legal claims or actions one can take if a promise isn’t kept.

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Gift vs. Consideration

A gift lacks consideration as there is no exchange of value.

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Legal Concept of Value

The principle that only valuable promises can form a binding agreement.

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Contract Enforceability

The ability to legally compel parties to perform their contractual obligations.

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Mutuality of Obligation

Both parties must be bound to perform, ensuring fairness in contracts.

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Legal Value

A change in a party's legal position arising from a contract.

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Detriment

A loss or disadvantage experienced by one party due to a contract.

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Promisor

The party in a contract who makes a promise.

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Promise (in contract)

A commitment made by one party to another to do or not do something.

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Mutual Detriment

When both parties incur a loss or give up a right in a contract.

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Contract Validity

A contract is valid if it includes legal value and consideration.

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Exchange of Detriments

Two parties agree to refrain from something beneficial to create a contract.

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Consideration in Contracts

Something of value exchanged between parties in a contract.

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Mutual Consideration

Both parties must provide something of value for the contract to be enforceable.

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Social Promises vs. Contracts

Social promises lack mutual consideration and are generally non-binding.

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Enforceability of Promises

A promise becomes enforceable when consideration is provided by both parties.

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Gift vs. Promise

A gift transfers ownership without expectation of something in return, while a promise requires consideration.

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Forbearance in Contracts

An agreement to refrain from doing something, which can also be valid consideration.

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Implied Duty of Fair Dealings

A legal expectation that contracts must be executed fairly without arbitrary actions.

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Termination Clauses

Contract provisions allowing for the end of the agreement under certain conditions.

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Change in Legal Position

The alteration of a party's rights or obligations due to a contract.

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Output Clauses

Contract terms specifying quantities or limits on production or sales.

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Contractual Obligations

Duties or responsibilities that parties are legally bound to perform.

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Higher Salary Negotiation

Discussing pay increases based on competing offers during contract terms.

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Liquidated Debt

A debt whose amount is agreed upon by both parties and is not in dispute.

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Accord and Satisfaction

An agreement where parties settle a dispute by arriving at a compromise amount.

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Creditor

A person or entity to whom money is owed by a debtor.

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Debtor

A person or entity that owes money to a creditor.

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Disputed Claim

A claim where the parties involved do not agree on the amount owed.

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Good Faith

An honest intention to deal fairly with others, often seen in negotiations.

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Compromise

An agreement reached by mutual concession, resolving a disagreement.

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Forbearance in Debt

The act of a creditor refraining from taking legal action on a debt owed.

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Promissory Estoppel

A legal doctrine that enforces a promise even without consideration when injustice would result.

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Substantial Economic Loss

A significant financial detriment suffered by the promisee if a promise is not enforced.

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Reasonable Foreseeability

The promisor must foresee that the promisee will rely on their promise.

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Doctrine of Estoppel

Prevents a party from denying a promise if another relies on it to their detriment.

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Charitable Contributions

Promising or donating to organizations without receiving anything in return; may be legally enforced.

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Reliance

The act of the promisee acting on the promise made by the promisor.

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Injustice Avoidance

The need to enforce a promise to prevent unfair consequences.

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Construction Contract Example

A case where reliance on a pledge led to a binding contract for construction.

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Study Notes

Chapter 9: Mutual Consideration

  • Mutual consideration is essential for a valid contract
  • Consideration is something of value exchanged between parties
  • Consideration can be an act, a forbearance, or a promise
  • A promise to make a gift is generally not enforceable unless a transfer of ownership has occurred

What is Consideration?

  • Consideration involves a change in legal position for each party
  • Consideration must be mutual
  • Something exchanged must have legal value
  • Mere social promises lack consideration
  • Legal value arises from a party's change in legal standing
  • Bargained-for exchange involves mutual promises forming the primary agreement
  • A contract isn't valid where there is an illusory promise

When is Consideration Not Required?

  • Promissory estoppel (exception to consideration), occurs when a promise is relied upon and the other party suffers injustice if the promise is not kept.
  • Charitable pledges are often legally binding even without direct exchange of value
  • Modifications of existing contracts may not require new consideration if made in good faith, and the agreement is explicitly stated.
  • Courts aren't concerned with fairness of amount of consideration
  • Specific situations, like those involving the sale of goods/services or promises made on a specific date, may be subject to different laws/rules.

Hot Debate:

  • Example of promissory estoppel (a situation with a wealthy aunt's promise to give a cruise)
  • Students should form arguments for or against the aunt needing to uphold her promise in this example

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Chapter 9 Mutual Consideration PDF

Description

Explore Chapter 9 on Mutual Consideration, a key aspect of contract law. This quiz covers the essentials of legal consideration, its mutual nature, and the circumstances under which it may not be required. Test your understanding of how consideration impacts the validity of contracts.

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