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Law 122 - Chapter 8 - My Notes.docx

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Ryerson University
Law and Business
LAW 122
Theresa Miedema

Chapter 8 Consideration and Privity Gratuitous Promise – is a promise for which nothing of legal value if given exchange Consideration – exists when a party either gives (or promises to give) a benefit to someone else or suffers (or promises to suffer) a detriment to itself Sufficient Consideration – may be almost anything of value Adequate Consideration – has essentially the same value as the consideration for which it is exchanged Peppercorn Theory – law presumes that people are able to look after their own interest; it generally allows them to decide what price they will demand under a contract. Forbearance to Sue – is a promise to not pursue a lawsuit Mutuality of Consideration – requires that each party provides consideration in return for the other party’s consideration Past Consideration – consists of something that a party did prior to the contemplation of a contract Pre-Existing Obligation – is an obligation that existed, but was not actually preformed, before the contract was contemplated.  A pre-existing public duty (police and firemen)  A pre-existing contractual obligation owed to a third party  A pre-existing contractual obligation owed to the same party o How to avoid the rule  They can use the process of novation to discharge their initial contract and enter into a new agreement  They can agree that something new is to be done in exchange for the extra price  If it is placed under a seal, then its binding Pre-Existing Obligations and Consideration Situation Can a Pre-Existing Obligation Generally Provide Consideration for a New Contract? A pre-existing public duty No A pre-existing contractual obligation owed to a third party Yes A pre-existing contractual obligation owed to the same party No Promise to Forgive an Existing Debt - A promise to accept a smaller sum is enforceable if it is placed under seal - A promise to accept less money is enforceable if the debtor gives something new in exchange for it. (time, payment type) Seal – is a mark that put on a written contract to indicate a party’s intention to be bound by the terms of that document, even though the other party may not have given consideration. Estoppel – is a rule that precludes a person from disputing or retracting a statement that they made earlier Promissory Estoppel – is a doctrine that prevents a party from retracting a promise that the other party has relied upon These four requirements must be met 1. The represent
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