business law 10.2

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

• 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

or gratuitous promises are unenforcable because they lack consideration

• illegal consideration
• illusory promises
• moral obligation
• preexisting duty
• past consideration

a contract cannot be supported by a promise to refrain from doing an illegal act

if one or both parties to a contract can choose not to perform their contractual duties, the contract lacks consideration

a promise made out of a sense of moral obligation, honor, love, or affection lacks consideration

a promise to perform an act or do something that a person is already under an obligation to do lacks consideration

a promise based on a party's past consideration cannot be the basis for a contract

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

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

a contract that requires a party to use its best efforts to accomplish the objective of the contract that is enforceable

compromise agreement is accord, if accord performed called satisfaction; a compromise

(detrimental reliance) a policy-based equitable doctrine that prevents a promisor from revoking his prommise even though the promise lacks consideration.

• 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