CHAPTER 11 AND 12.docx

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Virginia Commonwealth University
MGMT 644

CHAPTERS 11 AND 12 CHAPTER 11 Consideration: must be given before a traditional contract or e-contract can exist. Consideration can come in many forms including tangible payments (money or property), or the performance of an act (providing legal services). Consists of 2 elements: Must be of Legal Value given in exchange of a promise. It can be considered as legal value if promise suffers a legal damage or the promisor receives a legal benefit. Must be Bargained for Exchange – Exchange that a party engage in that leads to an enforceable contract. Most contracts have this. Gift Promises: or (gratuitous promise) are unenforceable because they lack consideration. To change a gift promise into an enforceable promise, the promisee must offer to do something in exchange – that is, give consideration of promise. EX: if you promise to give 100,000 dollars but if the person has nothing to get back in return then he can withdraw, but if he has something getting back in return than it’s a contract. Ex if I pass the class then I get 100,000 dollar from professor then it’s a contract.  Once a gift is given you can’t take it back, you can’t un-due the gift. There always has to be something you are doing to get something in return for a contract to be valid. Contracts Lacking Consideration 1. Illegal consideration – a promise to refrain from doing an illegal act. Ex: I will burn your house down unless you pay me $10,000. 2. Illusory Promises – a promise in which one or both parties can choose not to perform their obligations. One or both parties can just change their mind. Ex: if you were asked to mow the lawn and you don’t want to. 3. Pre existing duty – a promise based on the preexisting duty of the promise to perform. Ex: you already have a contract written, but then you want to add more on it than he is not covered by law. A police man can’t demand money from someone in order for him to save them from becoming a victim of a crime. 4. Past consideration – a promise based on the past performance of the promise. This is based on something you have already done, so it’s not going to support the contract because you have already done the work. Ex: an employee offers you to give bonus of $25,000 up on your loyalty for the employment upon retirement but refuses to pay later then the contract is unenforceable because it’s based on past consideration. Settlements - Is an agreement whereby the parties agree to accept something different in the satisfaction of the original contract. CHAPTERS 11 AND 12 - If you are not happy with the settlement and don’t want to settle down then you have only 2 options, one to go with the contract that was original or the settlements. Unless the settlements are accepted original contract stays there. - Accord and satisfaction: when I pay you the accord it’s called the satisfaction. The only way an accord works if I perform the accord. Promissory Estoppel: where promise is made but not depending on the consideration. Fairness: If someone relies on the promise than it turns into the contract. Permits a court to order the enforcement of a contract that lacks consideration in such cases 1. A promise 2. promisor would know that the promisee would rely on the promise 3. Promissee does rely on promise 4. Injustice would occur CHAPTER 12 Capacity to K – capacity to enter into a contract. Infancy Doctrine and Disaffirmance: deals with minors, under age of 18. The law says that minors under the age of 18 do not have the right to enter a contract. This doctrine protects minors from praying adults. Contracts with minors are voidable only by the minor until they turn 18. Adults on the other hand are bound by the contract. Gives minor option of retracting himself from contract this is called dissafirmance. Duties of Restoration and Restitution: adult must return everything he purchased from the minor. Has to give him value of vehicle as if it were given the day of contract if the
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