1. Define consideration
    A bargained for exchange. An exchange is “bargained for” if it is what is sought by both parties as the reason or motivation for their exchange.
  2. Benefit/Detriment Theory v. Bargain for Exchange Theory
    Benefit/Detriment Theory: Traditional View

    i) Benefit to the promisor OR detriment to the promisee.

    Bargain for Exchange Theory (Quid-pro-quo); Modern View MSPE

    i) Promise induces the detriment and the detriment induces the promise

    • 1. Promise Made by the promisor?
    • 2. Promise or Performance sought by the promisor?
    • 3. Was there a promise or performance by promisee?
    • 4. Promisee promise or performance in exchange for the promise made by promisor?
  3. Define nominal and sham consideration.
    Mere appearance of Consideration is Insufficient-

    I) Nominal- actual exchange of something small to appear as consideration (IE $1)

    (1) Exception: nominal consideration OK for an option contract

    II) Sham- fake exchange; parties "say" there is consideration but not actually exchange anything.

    Court refuse to enforce nominal and sham consideration b/c there is no true bargain
  4. Define gratuitous promise
    • giving someone something for nothing. The
    • promise is unenforceable even if a detriment is incurred b/c promise is not in exchange for anything.
  5. Define Illusory Promises
    A promise to do nothing. Appears to be a promise but is conditioned upon the promisor and no commitment is made. The offer is not definite so not consideration.
  6. Define condition. Is it consideration?
    An act that must be completed before the acceptance of a contract.

    Not consideration...
Card Set