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Ch 12 Consideration (aced the test and got 96%)

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Business Law
BLAW 3201
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Ch 12ConsiderationConsiderationDefinition the inducement to enter into a contractElements legal sufficiency and bargained for exchangeLegal SufficiencyDefinition consists of either a benefit to the promisor or a detriment to the promiseLegal Benefit obtaining something to which one had no prior legal rightLegal Detriment doing an act one is not legally obligated to do or not doing an act that one has a legal right to doAdequacy not required where the parties have freely agreed to the exchangeread page 209 againIllusory Promise promise that imposes no obligation on the promisorex If Ames Inc agrees to sell to Barnes Co as many barrels of oil as Barnes shall choose at 40 a barrel there would be no consideration Barnes may wish or desire to buy none of the oil yet in buying none it would fulfill its promiseAn agreement containing such a promise as that made by Barnes although accepted by both parties does not create a contract bc the promise is illusionaryperformance by Barnes is entirely optional and the offer places no constraint upon its freedomBarnes is not bound to do anything nor can Ames reasonably expect to receive any performanceThus Barnes by its promise suffers no legal detriment and confers no legal benefitThe following promises are NOT illusoryOutput Contract agreements to sell all of ones production to a single buyer There is considerationRequirements Contract agreement to buy all of ones needs from a single producerThere is considerationExclusive Dealing Contract grant to a franchise or licensee by a manufacturer of the sole right to sell goods in a defined marketThere is considerationConditional Promise one where the obligations are contingent upon the occurrence of a stated eventEx If Debbie offers to pay John 8000 for Johns automobile provided that Debbie receives such an amount as an inheritance from the estate of her dead uncle and John accepts the offer the duty of Debbie to pay 8000 is conditioned upon her receiving 8000 from her deceased uncleThere is considerationPreexisting Public Obligations public duties such as those imposed by tort or criminal law are neither a legal detriment nor a legal benefitEx If Cleon promises to pay Spike the village ruffian 100 not to abuse him physically Cleons promise is unenforceable bc
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