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LPP 255 (13)
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Chapter 12

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Syracuse University
Law & Public Policy
LPP 255

CHAPTER 12 • Consideration is broken down into 2 parts • In bilateral contracts, consideration consists of a promise in return for a promise o Something of legally sufficient value must be given in exchange for the promise o There must be a bargained for exchange • LEGALVALUE o 1. Apromise to do something that one has no prior legal duty to do o 2. The performance of an action that one is otherwise not obligated to undertake o 3. The refraining from an action that one has a legal right to undertake  Called forbearance Example of bilateral: buyer and seller o Buyer has a promise to ship goods o Seller has a promise to pay for goods  Both promises constitutes consideration for the contract Example of unilateral: promise in return for performance o When you finish painting I will pay you  The act of painting is consideration that creates the owners contractual obligation to pay • BARGAINED FOR EXCHANGE o The item of value must be given or promised by the promisor in return for the promisee’s promise, performance or promise of performance o Distinguishes promises from gifts  No bargained for exchange in gifts Adequacy of consideration • Consideration involves the requirement that consideration be something of legally sufficient value in the eyes of the law o Concerns the fairness of the bargain • Courts typically do not determine adequacy o Parties have to decide worth of promises • Inadequate consideration may cause a court to examine weather voluntary consent was lacking Agreements that lack consideration • Preexisting duty o Apromise to do what one already has a legal duty to do, does not constitute legally sufficient consideration  May be imposed by law or a previous contract • Unforeseen difficulties o Courts sometimes allow exceptions to preexisting duty • Rescission and new contract o Rescission- unmaking of contract • Past consideration o You cannot bargain for something that has already taken place o Past consideration= no consideration o Noncompete agreement, covenant not to compete  Employee agrees not to work for competitors • Illusory promises o The terms of the contract express uncertainty  Illusory= without consideration and unenforceable • Fails to bind the promisor • Option to cancel clause o When the promisor has the option to cancel the contract before performance has begun, the promise is illusory • Requirements and output contracts o Requirement contract= buyer and seller agree that the buyer will purchase from the seller all of the goods of a designated type that the buyer needs or requires o Output contract= the
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