Business Law Chapter 12
Terms
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- Consideration
- Inducement to make a promise enforcement
- Gratuitous Promise
- Promise made without consideration
- Legal Sufficiency
- Benefit to the promisor or detriment to the promisee
- Legal Detriment
- Either doing an act that one is not legally obligated to do or refraining from doing an act that one has a legal right to do
- Legal Benefit
- Obtaining something to which one had no legal right
- Adequacy of Consideration
- Not required where parties have freely agreed to the exchange
- Promisor
- Person making a promise
- Promisee
- Person receiving a promise
- Illusory Promise
- Promise imposing no obligation on the promisor
- Output Contract
- Agreement to sell all of one's product
- Exclusive Dealing
- Sole right to sell goods in a defined market
- Conditional Promise
- Obligations contingent upon a stated event
- Preexisting Public Obligations
- Performance of public duties such as those imposed by tort or criminal law is neither a legal detriment nor a legal benefit
- Preexisting Contractual Duty
- Performance of a preexisting contractual duty is not consideration
- Modification of a Preexisting Contract
- Under the common law, a modification of a preexisting contract must be supported by mutual consideration; under the Code a contract can be modified without new consideration
- Substituted Contract
- Parties rescind their original contract and enter into a new one
- Undisputed Debt
- Obligation whose existence and amount are not contested
- Settlement of an Undisputed Debt
- Payment of a lesser sum of money to discharge an undisputed debt does not constitute legally sufficient consideration
- Disputed Debt
- Obligation whose existence or amount is contested
- Settlement of Disputed Debt
- Payment of a lesser sum of money to discharge a disputed debt is legally sufficient consideration
- Bargained-for Exchange
- Mutually agreed upon exchange
- Past Consideration
- Unbargained-for past events
- Statute of Limitations
- Time period within which a lawsuit must be initiated
- Promise to Pay Debt Barred by Statute of Limitations
- A new promise by the debtor to pay the debt renews the running of the statute of limitations for secondary statutory period
- Promises to Pay Debt Discharged in Bankruptcy
- May be enforceable without consideration
- Voidable Promises
- A new promise to perform a voidable obligation that has not been previously avoided is enforceable
- Moral Obligation
- A promisee made to satisfy a preexisting moral obligation is generally unenforceable for lack of consideration
- Promissory Estoppel
- Doctrine that prohibits a party from denying his promise when the promisee takes action or forbearance to his detriment reasonably based upon the promise
- Contracts Under Seal
- Where still recognized the seal acts as a substitute for consideration