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Lecture

Law 122 - Chapter 8 - My Notes.docx

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Department
Law and Business
Course Code
LAW 122
Professor
Theresa Miedema

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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 representor (the party making the promise must clearly indicate that it will not enforce its legal
rights against the representee ( the party receiving the promise)
2. The representee must rely upon the statement in a way that would make it unfair for the
representor to retract its promise
3. The representee must not be guilty of inequitable behaviour
4. The presentor’s statement must be made in the context of an existing legal relationship

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Description
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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