Problem Areas Concerning Consideration

Problem Areas Concerning Consideration

ü   Uncertain Performance.

ü   Settlement of Claims.

ü   Promises enforceable without consideration.

ü   Uncertain Performance

ü    Illusory Promises.

§   Promisor has not definitely promised to do anything (no promise at all).

ü   Option-to-Cancel Clauses.

ü   Requirements and Output Contracts.

Settlement of Claims

Debtor offers to pay a lesser amount than the creditor purports to be owed.

Accord and Satisfaction.

Liquidated Debt.

Ø  Amount has been ascertained, fixed, agreed on, settled, or exactly determined.

Unliquidated Debt.

Ø  Parties give up legal right to contest the amount in dispute, and thus consideration is given.

Release bars any further recovery beyond the terms stated in the release.

Case 11.3: Mills v. Berlex Laboratories (1999).

Convenant not to Sue is an agreement to substitute contractual obligation for some other type of legal action based on a valid claim.

Promises Enforceable Without Consideration

Promises to Pay Debt Barred by a Statue of Limitations.

Detrimental Reliance and Promissory Estoppel:

§   Must be definite promise.

§   Promisee must justifiably rely on the promise.

§   Reliance is substantial.

Justice will be served by enforcing promise.