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Lecture

Contract Handout #2(Consideration, Capacity).pdf

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Department
Management
Course
MGT393H5
Professor
Manfred Schneider
Semester
Winter

Description
MGT 393 - BUSINESS LAW Contract Law – Handout #2 CONSIDERATION 1. GENERAL ▯contract = bargain supported by consideration -promise is unenforceable if gratuitous -promise is enforceable if purchased ▯consideration is -- benefit or detriment ▯ each party must either ▯ (promise to) provide benefit to someone ▯ (promise to) suffer detriment to self ▯ must come from each party but not to each party ▯ “I’ll pay $50 to your brother if you teach my sister” repeat same point /and a few other ideas ▯ contract under seal does not require consideration; ▯ voluntary promise or payment cannot be enforced; ▯ contract based on bargain theory; ▯ an agreement is not enforceable at instance of plaintiff unless consideration flowed from the plaintiff to the defendant or a third party; ▯ consideration need not have been stated in express terms; can be in an implied form; 2. GRATUITOUS/VOLUNTARY PROMISES • where element of bargain is lacking • where accepted - may not be enforceable • an express promise by the recipient of a charitable pledg e to carry out the object of the pledge will render that pledge binding on the promisor [pledge given in relation to a precisely stated purpose] • steps taken and expenses incurred by the recipient of the pledge with a view to carrying out the object of the pledge will provide the consideration necessary (more of an exception and very limited to charitable institution) 3. ADEQUACY OF CONSIDERATION ▯consideration must be sufficient -sufficient = any value from legal perspective -money, goods, or services ▯consideration need not be adequate -adequate = exchange of equal value ▯forbearance to sue • in the absence of fraud/duress/undue influence etc. - adequacy of consideration is a question for the parties and not the court 1 4. PAST CONSIDERATION AND EXISTING D UTY • once performance under a contract has been substantially completed, or even after the terms of contract have been definitively settled, any additional promise or disclaimer of rights by one of the parties will not be binding unless supported by fres h consideration; e.g. GILBERT STEEL 5. GRATUITOUS REDUCTION OF DEBT •
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