Recording-2025-03-17T20:10:42.218Z

Introduction to Consideration

• Definition of Consideration: An essential element in a contract where something of value is exchanged between parties.

• Analogy with Movie Rentals: To rent movies, a user must click a button—this represents engaging in a bargain or exchange.

• Reference to Digital Underground's Song: Uses the song "Kiss Me and I'll Kiss" to illustrate the idea of revocable gifts and obligations in relationships.

Issues in Consideration

Two Main Issues

1. Issue of Value

   • Economic Value: Consideration must have legal value; what you already have an obligation to do lacks legal value.

   • Chris Rock's Comedy: Refers to routines where people seek credit for obligations, e.g., a father stating he takes care of his children is doing his duty, not exceptional.

2. Past Consideration

   • Explanation: If consideration is previously agreed upon and not part of a current bargain, it is considered past consideration.

   • Chris Rock's Terminology: "Bringing up old shit" refers to trying to leverage past actions in present dealings.

Types of Consideration

Legal Value

• Parties must exchange something with legal benefit; obligations must not be pre-existing.

• Example:

  • If you promise $100 in exchange for headphones, it must be a new consideration, not something you are already obligated to do.

Forbearance

• Definition: Agreement not to do something legally permissible (e.g., not gambling while underage).

• Example: A promise not to gamble when legally allowed to do so lacks consideration.

Bargaining and Legal Constructs

• Courts do not assess economic fairness of bargains; they enforce the agreements made by parties even if they seem inadvisable.

• Example: Trading a computer for a skateboard is valid if both parties consented.

• Peppercorn Principle: Even a very low value item can constitute consideration if parties agree to exchange it.

Output and Requirements Contracts

• Definition of Output Contract: An agreement to buy everything produced (e.g., crops).

• Definition of Requirements Contract: An agreement to purchase all needed goods from a supplier.

Law of Modifications and Exceptions

Modification of Contracts

• Important Concept: If changes are made to a contract (e.g., adding extra rooms), it constitutes a new contract or modification.

• Discussion on Costs: Changing costs due to modifications must consider new negotiations, unlike obligations tied to pre-existing duties.

Promissory Estoppel

• Definition: Legal principle preventing harm caused by reliance on a promise.

• Application of Promissory Estoppel: Protects parties relying on promises where reliance results in detriment.

  • Three Scenarios:

    1. Job Offer Scenario: Quitting current employment based on a promise.

    2. Inheritance Promise: Promises concerning taking care of someone in exchange for inheritance.

    3. Engagements in Schemes: Reliance on misleading business opportunities.

Conclusion

• Understanding consideration involves recognizing what constitutes a legal bargain, the role of forbearance, the significance of modifications, and the protective nature of legal principles like promissory estoppel.

• Next Class Topic: Examination of the settlement of debt.