LAW 122 Lecture Notes - Novation, Estoppel

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Published on 19 Apr 2013
School
Ryerson University
Department
Law and Business
Course
LAW 122
Professor
Chapter 8 CONSIDERATION AND PRIVITY
CONSIDERATION
Main reason for contract law is to enforce bargains
Mutual exchange for value
Gratuitous promise: is a promise for which nothing of legal value is given in
exchange
Creation of contract generally depends on an exchange of value. Consideration must be
provided by both parties
Consideration: exists when a party either gives (or promises to give) a benefit to
someone else or suffers (or promises to suffer) a determinant to itself.
Sufficient and Adequate consideration
Sufficient consideration: may be almost anything of value
Judges generally wanted to avoid becoming involved in intimate matters
Adequate consideration: has essentially the same value as the consideration for
which it is exchanged
Forbearance to Sue
Is a promise not to pursue a lawsuit
Past consideration
Mutuality of consideration: requires that each party provide consideration in
return for the other parties consideration
Past consideration: consists of something that a party did before entering into a
contract
Pre-Existing Obligation
An obligation that existed, but was not actually performed, before the contract
was contemplated
oA pre-existing public duty
oA pre existing contractual obligation owed to a third party
oA pre existing contractual obligation owed to the same party
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Pre-Existing Public Duty
Person who owes a pre-existing public duty cannot rely upon the obligation as
consideration for a new contract
Ex. Firefighters and police officers
By becoming a public servant a person does not promise to protect citizens
around the clock
Pre-existing contractual obligation owed to third party
A promise to perform a pre existing obligation that previously arose under a
contract with a third party can be good consideration for a new contract
Ex quartet getting paid for two separate contracts by doing one task, but if she
fails to do the task she can be held liable twice
Pre-Existing contractual obligation owed to the same party
If obligation arose under an earlier contract with the same party that is on the
other side of the new contract
People can use novation to discharge their initial contract and enter into a new
agreement that includes a higher price
Promise to Forive an existing Debt
Suppose lend 100,000 to me which I promise to pay in cash in june 1.
Explain that I do not have enough money and that you will discharge my debt in
exchange for 70,000. later on he can ask for 30,000 because the 70,000 is part
performance of promise I had earlier
Several exceptions
1. a promise to accept a smaller sum is enforceable if I is placed under seal
2. a promise to accept less money is enforceable if the debtor gives something new
in exchange for it. Ex 70 K plus a car
Certain restrictions:
1. requires part performance m part of the debt must have been paid
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Document Summary

Main reason for contract law is to enforce bargains. Gratuitous promise: is a promise for which nothing of legal value is given in exchange. Creation of contract generally depends on an exchange of value. Consideration: exists when a party either gives (or promises to give) a benefit to someone else or suffers (or promises to suffer) a determinant to itself. Sufficient consideration: may be almost anything of value. Adequate consideration: has essentially the same value as the consideration for. Judges generally wanted to avoid becoming involved in intimate matters which it is exchanged. Is a promise not to pursue a lawsuit. Mutuality of consideration: requires that each party provide consideration in return for the other parties consideration. Past consideration: consists of something that a party did before entering into a contract. Person who owes a pre-existing public duty cannot rely upon the obligation as consideration for a new contract.

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