CHAPTER 15: BARGAINED-FOR CONSIDERATION

Learning Objectives:• Nature of the Consideration Requirement• Bargain Theory of Consideration• Mutuality of Obligation• Contacts Valid Without Consideration

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CHAPTER 15: BARGAINED-FOR CONSIDERATION

1. Not every agreement (offer + acceptance) will be enforced in a court.

2. Concept: Bargained-for exchange in the legal position of the parties.

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NATURE OF THE CONSIDERATION REQUIREMENT

1. Introduction to the Concepts of Legal Benefit and Legal Detriment

a. Both Parties Should Receive a Legal Benefit and Incur a Legal Detriment

b. Consideration is the Price Paid for a Promise

2. Elements of a Bargain

3. Adequacy of ConsiderationChapter 15 4

BARGAIN THEORY OF CONSIDERATION

1. Introduction to the Doctrine of Mutuality of Consideration (applicable only to bilateral contracts)

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MUTUALITY OF OBLIGATION

2. Categories where there is NO mutuality:

a. Illusory Promisesi. Lack of a Legal Detriment

ii. Examples

iii. Special Case: Requirements and Output Contracts

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MUTUALITY OF OBLIGATION

2. Categories where there is NO mutuality:

a. Illusory Promises

b. Preexisting Dutyi. Definition: One makes a promise when they

are already under an obligation to act or not act.

ii. Categories in which Preexisting Duty Problems Arise

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MUTUALITY OF OBLIGATION

I. Modification of Non-Code Contracts

A. Nature of Area

B. Exceptions to Preexisting Duty Rule:1. Changes in Duties (e.g., new duty)

2. Unforeseen Difficulties

3. Rescission

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CATEGORIES IN WHICH PRE-EXISTING DUTY PROBLEMS ARISE

I. Modification of Non-Code Contracts

II. Modification of Code ContractsA. Areas Where No Consideration is

Necessary Where the Parties Agree to Change the Terms of an Existing Contract

B. Role of Good Faith

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CATEGORIES IN WHICH PRE-EXISTING DUTY PROBLEMS ARISE

I. Modification of Non-Code Contracts

II. Modification of Code Contracts

III. Discharges A. Discharge of Liquidated Debts

B. Discharge of Unliquidated Debts

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CATEGORIES IN WHICH PRE-EXISTING DUTY PROBLEMS ARISE

2. Categories where there is NO mutuality:

a. Illusory Promises

b. Preexisting Duty

c. Forbearance

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MUTUALITY OF OBLIGATION

1. Promissory Estoppel

2. Moral Obligation

3. Firm Offers and Renunciations

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CONTRACTS VALID WITHOUT CONSIDERATION

CHAPTER 15: BARGAINED-FOR CONSIDERATION