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I

Under bilateral K, TWO PROMISES are outstanding

A

B promises to mow A’s lawn, and A promises to pay B $50 when he does so

B

A pays check for future delivery — pending delivery is an outstanding promise, as is pending payment on check (check constitutes a promise)

II

Under unilateral K, ONE PROMISE is outstanding

A

A promises to pay B $50 for mowing A’s lawn

B

Reward offer -- $25 for return of my briefcase

C

A pays cash for future delivery — pending delivery is an outstanding promise

Consideration / Failure of Consideration

I

Bargain theory requires

A

ELTS:

1

BARGAINED-FOR EXCHANGE.  (Rest § 71)

2

DETRIMENT to promisee in exch for promisor’s promise

3

— BENEFIT to promisor not req’d.  Combination of two above elts implies it

B

Detriment to promisee in exchange for promisor’s promise

1

Detriment = giving up some legal right or limiting freedom of action in the future

a

Promisee must limit REALM OF CHOICE somehow

b

Need not be factual detriment (e.g., giving up smoking).  (Hamer) (Davies)

2

Promisor need not benefit.  (Hamer) (Rest § 79)

C

Cts don’t review adequacy of consid (except for uncon’y — then procedural anomaly req’d).  (Batsakis)

1

So, consid exchanged need not be of equiv value

D

No consid req’d for guarantee (as in loan) promise under Rest § 88, UCC

II

Failure of consideration

A

Four ways to fail:

1

NOMINAL consid (bargain in form, but not in substance)

2

ILLUSORY PROMISE (lack of mutuality)

3

LEGAL DUTY rule

4

Forbearance from asserting a legal right

a

Forbearance DOES make promise enforceable if claim to legal right is IN GOOD FAITH (though need not actually be valid)

III

Nominal consid

A

Here, K has FORM of bargain but not SUBSTANCE of bargain

B

Minimal consideration is actually bargained for

1

In contrast, nominal consideration is where parties just say there’s a bargain, when there really isn’t — they just dress it up

C

Note that nominal consid won’t sustain a bargain, but will sustain an OPTION

IV

Illusory promises

A

An ILLUSORY promise does not constitute consideration.  (Wickham)

1

Ex: when one party hasn’t committed to buying a minimum amt of other’s product (BUT modern view may enforce K by inferring duty of good faith into K)

B

Doesn’t apply to:

1

UNILATERAL K’s

2

Situations where there is no mutuality only b/c promise is NOT LEGALLY ENFORCEABLE (e.g., unenforceable due to minority or duress or S/F)

C

Conditions

1

Condition = circums that must come to pass before one must perf (or be relieved of obl to perf)

2

Two types: no duty to perf unless cond occurs; duty to perf suspended if cond occurs

3

Just b/c contract is conditional does not mean there is no mutuality.  (Scott)

3

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