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Chapter 12

BUL3130 Chapter Notes - Chapter 12: Rescission, Estoppel, Contract

Business Law
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Legal Environment of Business Chapter 12 Consideration
12.1 Legal Sufficiency
o To be legally sufficient, consideration exchanged for the promise must be either a legal detriment to the
promise or a legal benefit to the promisor
Promisee must give up something of legal value or promisor must receive something of legal value,
in return for the promise
o Legal Detriment
Doing which the promisee was under no prior legal obligation to do so
Refrain from doing which he was previously under no legal obligation to refrain from doing
o Legal Benefit
Obtaining by the promisor of that which he had no prior legal right to obtain
o Most cases involving legal detriment to the promisee will also involve a legal benefit to the promisor
The presence of either is sufficient
o Adequacy
Legal sufficiency has nothing to do with adequacy of consideration
The subject matter that the parties agree to exchange does not need to have the same or equal
The law will regard consideration as adequate if parties have freely agreed to the exchange
The requirement of legally sufficient consideration, is not concerned with whether the bargain was
good or bad
The parties agreed to exchange
The subject matter exchanged imposed a legal detriment upon the promisee or conferred a
legal benefit upon the promisor
o Unilateral Contracts
A promise is exchanged for a completed act or a forbearance to act
The offeror makes a promise and is therefore the promisor
The other part is the offeree and thus the promisee
Fo the poiso’s poise to e idig, it must be supported by consideration consisting of either
a legal detriment to the promisee or a legal benefit to the promisor
o Bilateral Contracts
In a bilateral contract, the parties exchange promises
Each party is both a promisor and a promisee
For poisee’s poise to e idig to the poiso, B ust suppot the poise with legally
sufficient consideration
Requires the promise the promisee receives in exchange from the promisor provide either a
legal benefit to the promisor or a legal detriment to the promisee
The poisee ust suppot the poiso’s etu poise with osideatio fo that
promise to be binding on the promisor
Mutuality of obligation A bilateral contract each promise is the consideration for the other
A general consequence each promisor in a bilateral contract must be bound or neither is
o Illusory Promise
Words of promise that make the performance of the purported promisor entirely optional
constitute no promise at all
They cannot serve as a consideration
Illusory promises will be distinguished from promises that impose obligations of
performance upon the promisor and thus can be legally sufficient consideration
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