LAW 122 Chapter Notes - Chapter 8: Himalaya Clause, Estoppel
LAW – Chapter 8 – Consideration and Privity
The main goal of contract law is to enforce bargains
Gratuitous promise – a promise for which nothing of legal value is given in exchange
Consideration – when a party either gives a benefit to someone else or suffers a detriment to
themselves
Sufficient consideration – may be almost anything of value
Adequate consideration – essentially the same value as the consideration for which it is
exchanged
Forbearance to sue – a promise to not pursue a lawsuit
Mutuality of consideration – requires that each party provide 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
Cannot support a contract
Pre-existing obligation – an obligation that existed but was not actually performed before the
contract was contemplated
Pre-existing public duty
oCannot rely upon that obligation as consideration for a new contract
Pre-existing contractual obligation owed to a third party
oGood consideration for a new contract
Pre-existing contractual obligation owed to the same party
oThe courts usually hold that the same person cannot be required to pay twice for
the same benefit
A promise is enforceable if its is contained in a contract that is supported by consideration
Exceptions: seals and promissory estoppel
Seal – a mark that is put on a written contract to indicate a party’s intention to be bound by the
terms of that document, even thought the other party may not have given consideration
Purpose is to draw that parties’ attention to the importance of the occasion and to
ensure that they appreciate the seriousness of making an enforceable promise outside
the usual bargaining process
Insignia or the word seal
Estoppel – a rule that precludes a person from disputing or retracting a statement that they
made earlier
Promissory estoppel – a doctrine that prevents a party from retracting a promise that the other
party has relied upon
The representor must clearly indicate that they will not enforce their legal rights against
the representee
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Document Summary
Law chapter 8 consideration and privity. The main goal of contract law is to enforce bargains. Gratuitous promise a promise for which nothing of legal value is given in exchange. Consideration when a party either gives a benefit to someone else or suffers a detriment to themselves. Sufficient consideration may be almost anything of value. Adequate consideration essentially the same value as the consideration for which it is exchanged. Forbearance to sue a promise to not pursue a lawsuit. Mutuality of consideration requires that each party provide 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 an obligation that existed but was not actually performed before the contract was contemplated. Pre-existing public duty: cannot rely upon that obligation as consideration for a new contract. Pre-existing contractual obligation owed to a third party: good consideration for a new contract.
