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LAW 122 (625)
Chapter 8

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Law and Business
LAW 122
Avi Weisman

Chapter 8 Consideration and PrivityConsiderationy Main reason for contract law is to enforce bargains y Mutual exchange for value y Gratuitous promise is a promise for which nothing of legal value is given in exchange y 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 y or suffers or promises to suffer a determinant to itselfSUFFICIENT AND ADEQUATE CONSIDERATION y Sufficient consideration may be almost anything of valuey Judges generally wanted to avoid becoming involved in intimate matters y Adequate consideration has essentially the same value as the consideration for which it is exchanged y Forbearance to Sue o Is a promise not to pursue a lawsuit PAST CONSIDERATIONy Mutuality of consideration requires that each party provide consideration in return for the other parties consideration y Past consideration consists of something that a party did before entering into a contractPREEXISTING OBLIGATION y An obligation that existed but was not actually performed before the contract was contemplated o A preexisting public duty o A pre existing contractual obligation owed to a third party o A pre existing contractual obligation owed to the same partyPreExisting Public Duty y Person who owes a preexisting public duty cannot rely upon the obligation as consideration for a new contract y x Firefighters and police officers y By becoming a public servant a person does not promise to protect citizens around the clockPreexisting contractual obligation owed to third party y 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 y x quartet getting paid for two separate contracts by doing one task but if she fails to do the task she can be held liable twicePreExisting contractual obligation owed to the same party y If obligation arose under an earlier contract with the same party that is on the other side of the new contract y People can use novation to discharge their initial contract and enter into a new agreement that includes a higher pricePromise to forgive an existing debt y Suppose lend 100000 to me which I promise to pay in cash in June 1
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