Chapter 13 Consideration

Flashcards covering key vocabulary terms related to consideration in contract law.

Consideration

Generally, the value given in return for a promise or a performance.

Legally Sufficient Value

To be legally sufficient, consideration must be something of value in the eyes of the law, which may consist of a promise, performance, or forbearance.

Forbearance

The act of refraining from exercising a legal right.

Bargained-for Exchange

Consideration must provide the basis for the bargain struck between the contracting parties.

Adequacy of Consideration

Involves how much consideration is given and concerns the fairness of the bargain.

Preexisting Duty

Under most circumstances, a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration.

Rescission

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made.

Past Consideration

Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain.

Illusory Promises

If the terms of the contract express such uncertainty of performance that the promisor has not definitely promised to do anything, the promise is said to be illusory—without consideration and unenforceable.

Requirements Contract

In a requirements contract, a buyer and a seller agree that the buyer will purchase from the seller all of the goods of a designated type that the buyer needs, or requires.

Output Contract

In an output contract, the buyer and seller agree that the buyer will purchase from the seller all of what the seller produces, or the seller’s output.

Accord and Satisfaction

An agreement for payment (or other performance) between two parties, one of whom has a right of action against the other. The accord is the agreement. Satisfaction is the performance that takes place after the accord is executed.

Liquidated Debt

A debt that is due and certain in amount. If a debt is liquidated, accord and satisfaction cannot take place.

Unliquidated Debt

A debt that is uncertain in amount. If a debt is unliquidated, accord and satisfaction can take place.

Release

A contract in which one party forfeits the right to pursue a legal claim against the other party. It bars any further recovery beyond the terms stated in the release.

Covenant Not to Sue

An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim. Unlike a release, a covenant not to sue does not always bar further recovery.

Promissory Estoppel

A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies. Such a promise is binding if justice will be better served by the enforcement of the promise.

Estopped

Barred, impeded, or precluded.

Charitable Subscriptions

A charitable subscription is a promise to make a donation to a religious, educational, or charitable institution.