business law 10.2

  1. consideration
    involves a thing of value being given in exchange for a promise. may be tangible or intangible property, service, legal right, or another thing of value
  2. requirements of consideration
    • legal value; something of legal value must be given as consideration. promisee-legal detriment, promisor- legal benefit
    • bargained-for-exchange; contract must arise from a bargained-for exchange
  3. gift promises
    or gratuitous promises are unenforcable because they lack consideration
  4. contracts lacking consideration
    • illegal consideration
    • illusory promises
    • moral obligation
    • preexisting duty
    • past consideration
  5. illegal consideration
    a contract cannot be supported by a promise to refrain from doing an illegal act
  6. illusory promises
    if one or both parties to a contract can choose not to perform their contractual duties, the contract lacks consideration
  7. moral obligation
    a promise made out of a sense of moral obligation, honor, love, or affection lacks consideration
  8. preexisting duty
    a promise to perform an act or do something that a person is already under an obligation to do lacks consideration
  9. past consideration
    a promise based on a party's past consideration cannot be the basis for a contract
  10. output contracts
    a contract in which the seller agrees to sell all its production to a single buyer is enforcable if the parties act in good faith
  11. requirements contracts
    a contract in which the buyer agrees to purchase all the requirements for an item from a single seller is enforceable if the parties act in good faith
  12. best-efforts contract
    a contract that requires a party to use its best efforts to accomplish the objective of the contract that is enforceable
  13. accord and satisfaction
    compromise agreement is accord, if accord performed called satisfaction; a compromise
  14. promissory estoppel
    (detrimental reliance) a policy-based equitable doctrine that prevents a promisor from revoking his prommise even though the promise lacks consideration.
  15. requirements of promissory estoppel
    • 1. the promisor made a promise
    • 2. the promisor should have reasonably expected to induce the promise to rely on the promise
    • 3. the promisee actually relied on the promise and engaged in action or forbearance of a right of a definite and substantial nature
    • 4. injustice would result if the promise were not enforced
Card Set
business law 10.2