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Chapter 9/10 Law Test

Chapters 9/10 Exam

Chapter 9

Chapter 9 Presentation

Three requirements for consideration:

Each party must give an act, forbearance, or promise to the other party
Each party must trade what they contribute to the transaction
What each party trades must have legal value (be worth something in the eyes of the law)

What is something of Value?

Act (doing something)
Forbearance (not to do something. For example refraining from suing someone)
Promises (Yes, promises have legal value! For example, a promise to pay

someone to mow a lawn)

Legal Value: A change in a party’s legal position as a result of a contract

Exchange of benefits (most common)
Benefit for a detriment (Money for cleaning your room when you don’t want to)
Exchange of two detriments (Won’t buy a dog if you don’t build a fence)

Adequacy of Consideration:

Does not have to be of equal economic value (For example, paying $7 for a water at a football game)

Existing Duty: They already have a duty to do the job!

Existing Public Duty (ex. Police Officer)
- They can’t accept more $ for more service.
Existing Private Duty (ex. Contractor)
- If there is already a contract, they must complete!

Past Performance A past act is not consideration!

Gifts: A transfer of ownership without receiving anything in return.

(Valentines story of former student)

Donor = the person giving the gift

Donee = the person receiving the gift

When is Consideration not required?

Promissory Estoppel

1) The promisor should reasonably foresee that the promisee will rely on the promise

2) The promisee does act (relies on promise)

3) The promisee would suffer substantial economic loss

4) Injustice can be avoided only be enforcement of the promise

When is Consideration not required?

Promises to Charitable Organizations

Why? Charities rely on pledges to make economic decisions

Consideration: What are the types?

Act, forbearance, promise

Chapter 9 Vocab

Composition of creditors	Agreement by all creditors to accept something less than the total amount of their claims in full satisfaction of a debtor’s obligations
Nominal consideration	Token consideration bears no relation to the real value of the contract. When parties either cannot or do not wish to state the amount precisely.
Consideration	Promise or action of one person in exchange for the promise or the action of another person
Forbearance	Refraining from doing what one has a right to do
Gift	Voluntary transfer of ownership of property without consideration
Legal value	Change in the legal position of a party as a result of the contract
Past consideration	Act that has already been performed and thus cannot be consideration for a promise in the present
Promissory estoppel	Enforcement of a promise to avoid injustice, even though no consideration is given for it
Promisor	Person who makes a promise
Promisee	Person to whom a promise is made
Firm offer	Merchant’s binding written promise to keep an offer to buy or sell goods
Statute of limitations	Specifies a time limit for bringing a lawsuit
Mutual consideration	Both parties give something of value Exception to it: Promises to charitable organizations Promissory estoppel **ALL CONTRACT MUST HAVE MUTUAL CONSIDERATION

Chapter 10

Chapter 10 Presentation

What do Minors, Insane Persons and Intoxicated Persons have in common?

They lack contractual capacity!

Definition: This means that they are protected, and have the chance to DISAFFIRM (get out of) a contract for non-necessaries.

What are Necessaries

Needed to maintain life and lifestyle

Included as Necessaries:

Food, Clothing, Medical Care, Shelter, Education, Tools used to Earn a Living

They must not already be possessed by the minor or be in the process of being supplied by parents or guardians

Rights of Special Parties

As a minor, you can disaffirm contracts for non-necessaries before you turn 18 AND before ratification AFTER you turn 18

(Once you turn 18, right to disaffirm lasts for a “reasonable length of time” only)

When can minors disaffirm?

Any time while still under the incapacity (under 18)
Within a reasonable time after attaining capacity (after turning 18)

Ratification can only occur after achieving majority (turning 18). If you perform any act (like making a payment on a non-necessary car) that clearly indicates the party’s intention to be bound ratifies the contract.

What if there is loss of Value?

In most states, if minors are unable to return exactly what was received under the contract they can still get back everything they gave!

Chapter 10 Vocab

Emancipation	Severing of the parent-child relationship Formula: when a court decres teh minor emancipated Informal: the parent and minor agree that the parent will cease support the minor marries the minor moves out of the family home the minor becomes a member of the armed forces the minor gives birth the minor undertake full-time employment **EMANCIPATED MINORS HAVE CONTRACTUAL CAPACITY
Scope of authority	Within the range of authorized acts
necessaries	Goods and Services reasonably needed to maintain one’s lifestyle
Intoxication	Inability to understand the consequences of a contract because of alcohol
ratification	Act after regaining capacity indicating an intent to be bound by a contract. Must occur AFTER achieving majority. Can occur by: Giving a new promise to perform as agreed or, Any accounts (such as making payments to the seller) that clearly indicates the party’s intention to be bound ONE RATIFICATION OCCURS IT CANNOT BE WITHDRAWN
Contractual capacity	Ability to understand that a contract is being made and its general meaning (minors, mentally incapacity, and intoxicated persons)
disaffirmance	Giving back what you have received under a contract and requesting the return of what you gave When can it be done? Any time while still under the incapacity or within a reasonable time after attaining capacity
Non- necessaries	Things not needed to maintain life or lifestyle
Minority	Period of time when a young person lacks full contractual capacity
Mental incapacity	A severe mental illness retardation, or senility
Age of majority	Either 18,19, or 21 in most states
minor	One who has not yet reached the age of majority

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