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Chapter 12 - Consideration
12-7
b. Discuss the text example of Connor versus Friendly Finance Company to illustrate
the application of the general rule to liquidated debt situations.
has been offered a part-payment check.
d. Distinguish composition agreements from accord and satisfaction.
8. Discuss forbearance to sue as valid consideration. Note how forbearance can amount to
a. The "good faith" test discussed in the text has been adopted by the Restatement
Second in section 74(1)(b). Some courts, however, require forbearing promisees to
have a reasonable belief in the validity of their foregone claim.
C. Bargained for Exchange.
1. Discuss the element of consideration that the legal value provided by the parties to each
other must be what they bargained for in exchange for making their own promises. In
other words, legal value is not sufficient on its own. Legal value is not consideration
unless it represents the promise or thing that the other party was looking to receive and
agent intervened and reactivated the wheel so that it fell on a lesser prize. Tropicana
moves for summary judgment, claiming that no contract could be formed a promotion
like this because Gottlieb gave no consideration. The court rejected this contention,
stating that Gottlieb gave consideration by allowing information about her to be collected
What is the relevance of the central disagreement about the fact whether the casino’s
agent intervened in the turn of the wheel in this summary judgment decision? The full
facts of the case include the fact that, while the Million Dollar Wheel was advertised in
newspapers and other publications, but the Gottliebs never saw the ads. You might
2. Discuss the general rule that past consideration is no consideration. The term "past
idea.
Chapter 12 - Consideration
12-8
3. Discuss the general rule that promises made to satisfy a preexisting moral obligation are
unenforceable for lack of consideration and the judicial and statutory exceptions to this
general rule.
Archdiocese did agree to pay for Doe’s therapy and counseling. After about five years of
paying for her services, the Archdiocese dramatically cut back its support. Doe sued the
Archdiocese had “no legal responsibility at this time” to Ms. Doe, would the case have
turned out the same? The court relied on the Archdiocese’s policy for its approach to
4. You may wish to tell the class, although this point is not covered in the text, that section
to prevent injustice [86(1)]. Such promises are not binding if the promisee conferred the
[86(2)].
D. Exceptions to the Consideration Requirement.
1. Discuss the doctrine of promissory estoppel and its evolution as a "substitute for" the
consideration requirement. Students have already seen how promissory estoppel operates
consideration context.
McLellan v. Charly (p. 395): Charly owned land in Madison, Wisconsin, in a prime
location for expansion by the University of Wisconsin, because it was situated between
two lab buildings in which research involving primates was done. The land was also seen
as valuable to animal rights activists, who intended to use it for an exhibition hall on
supporters held a rally on the land with a sign touting it as the “future home” of the
exhibition hall. That prompted the University to offer Charly the one-million-dollar
Chapter 12 - Consideration
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estoppel. The trial court found that the option was enforceable, and thus, Charly
Charly bargained for; (2) that the Option to Purchase showed an intent for Charly to be
bound; (3) that Charly got personal satisfaction from “tweaking” the University by selling
to the animal rights activists; and (4) that McLellan’s attempts to find financing were
valuable. The court rejected each.
document was subject to promissory estoppel.
Points for Discussion: Why were Bogle’s actions following his initial conversations with
Charly insufficient to warrant promissory estoppel liability? (They were not in reasonable
reliance on the supposed promise and Charly could not have foreseen that those actions
would follow given the preliminary nature of the conversations.) Why was the Option to
but rather made to McLellan.)
Additional Example: Problem Case #1.
3. Discuss the exception that most states make to the consideration requirement for
promises to reaffirm debts barred by a bankruptcy discharge. Note the obstacles to
reaffirmance flowing from the Bankruptcy Reform Act of 1978.
4. Note the fact that promises to pay charitable subscriptions are often enforceable despite
Example: Problem Case #10.
IV. RECOMMENDED REFERENCES:
A. RESTATEMENT (SECOND) OF CONTRACTS (1983).
V. ANSWERS TO PROBLEMS AND PROBLEM CASES:
Chapter 12 - Consideration
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the promised $250,000 payment. Skebba’s foregone employment opportunities were never
part of the bargaining for the promise. Skebba v. Kasch, 724 N.W.2d 408 (Wis. Ct. App.
2006).
2. No. The promissory language of the 1968 handbook and the oral promise made to Ross and
return. The employment benefits he received in 1990 were not bargained for and given in
(Ill. Ct. App. 2007).
3. No. The court found that Stanley provided no consideration for the release. Stanley and
Hemmelgarn had agreed to construct the worship facility for $66,000. The men took draws
$102,000, whereas the contracts only entitled Stanley and Hemmelgarn to $66,000. The
court stated that a promise to forego something that one is not entitled to does not constitute
LEXIS 1770 (Ohio Ct. App. 2011).
4. No. The debt between the two was liquidated (certain and owing). Kyung-Hu agreed to
a hypothetical case.
5. Yes. A charitable pledge can be enforceable if there is either consideration for the promise
Boston University, 647 N.E.2d 1196 (Mass. Sup. Jud. Ct. 1995).
6. No. The court stated that for a contract to be valid, both parties must provide consideration.
promise was, therefore, illusory. Heye v. American Golf Corporation, Inc., 80 P.3d 495
(N.M. Ct. App. 2003).
7. No. The court found that there was no consideration because past consideration is not
App. Div. 2007).
8. No. The court found that the exchange of promises was adequate consideration for the
Schumacher had repudiated the contract. It was the purchase that was the legal value over
9. Yes. Rowan was allowed to continue with the test on the third day on the slope, which he
would not have necessarily had the legal right to do. Even though he was the majority of
Chapter 12 - Consideration
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the way through the test, being able to continue it on the third day had legal value to him.
Had he refused to sign the release, he would not have been able to finish. Thus, the release
was supported by consideration and valid. Based on Rowan v. Vail Holdings, Inc., 31 F.
Supp. 2d 889 (D. Colo. 1998). [Note that the facts and party relationships in the Problem
return that it was not already obligated to give. Under the common law of contracts (which
would probably apply here since the contract appears to be primarily a service contract), new
requires that such modifications be based on good faith. Here, there is no information
indicating that the supplier had a good faith reason for demanding a higher price. The facts
is therefore not enforceable. This is a hypothetical question.
