K's Consideration Test Outline

The Formation Stage:  Conventional Consideration (Validity)
  	History
		1) Debt
			1. Quid pro quo:  this 4 that
			2. Give something in return
			3. Bargain / exchange
		2) Assumpsit
			1. Show damages/detriment
		3) Debt + Assumpsit = Bargain 4 detriment (concept of consideration)
			1. D bargained 4 it
			2. P gave it in exchange 4 Ds prom.
			3. Holmes' version of barg. & legal value components
  	Bargain Components
		1) Did D barg. 4 "it"? Ps detriment must @ least purport 2 
		B @ least part of the inducement of Ds prom
			1. Look @ S/M of D; D promed b/c wanted the obj.
			2. To @ least purport, there must B @ least 
			formal/nominal consid.
				(1) Nominal consideration--some ct's won't 
				enforce even if 
				some small formal consideration given 
				(cloaked gift)
				(2) Sham consideration--no formal/nominal 
				consideration so that ct.'s won't enforce (cloaked gift)
			3.   P's detriment doesn't have 2 B primary/sole 
			motivation but only @ least part of the inducement
				(1) In PE, prom. comes before detriment 
				so no inducement
				(2) Cond'al gifts/donative proms, no 
				detriment desired so no benefit 2 D
				(3) Moral obligation, detriment before 
				prom. so X'ing reversed
		2) Did P give "it" in exchange?  D's prom. @ least purported 
		2 B @ least part of the inducement 4 Ps detriment
			1. Look @ P's S/M
			2. Past consideration is no consideration; can't 
			change by mere form
			3. Must look @ every act &/ forebearance by P
		3) Dovetail of Mutual Assent & Bargain Components
			1. Offer is a cond. prom; Did D barg. 4 it where 
			prom. is cond'al on offerees giving something
			2. Acceptance is giving req'ed return; Did P give 
			it, req'ed return,  in exchange 4 D's prom. 
  	Legal Value Component
		1) Hohfeld's Terms
			1. Legal Detriment--surrender of legal rt./pwr & 
			assumption of new legal duty/pwr of liab.
			2. Legal Benefit--obtaining new legal rt./losing 
			old legal duty
			3. Legal Value--Not concerned about econ. value, 
			detriment, etc.
		2) Econ v Legal
			1. Peppercorn Theory of Consid--econ. value can B 
			small as long as legal value there
			2. Econ. relev. 4 barging but not 4 legal components
		3) Did "it" entail legal detriment 2 P?
			1. Implied prom.'s can entail legal detriment 2 P
			2. Unilateral K--perf./forebearance 4 prom. but 
			no legal detriment if pre-existing duty 4 perf/forebearance
			3. Bilateral K--subst. value of the prom. 
			restricts the freedom of K
		4) Arguments by D that P didn't incur legal detriment
			<1> Illusory Proms (IP)--P didnt really give a prom.
				(1) Req't & output K
					1. Req=quanity by buyers need
					2. Output=quantity by sellers output
					3. As long as theres partial 
					restriction(rsxn) from 
					outside of Ps control, no IP b/c 
					no freeway out
					4. Abs rsxn=amt, cond'al rsxn=buy 
					if something else happen
				(2) If there's freeway out 4 P, there'sIP
				(3) Mutuality of Obligation Lacking
					1. Econ. undertaking--prom's 
					roughly = in econ; 
					we don't consider this b/c only 
					look @ legal
					2. Enforceability of Remedy--Both 
					parties can 
					enforce remedy but not good arg. 
					against voidable K sit.
					3. Remedy --Both can ask 4 
					specif. perf. of 
					remedy but that's 4 litigation 
					stage not in formation stage
					4. Consid. --Both D & P should 
					give consid; 
					doesn't make sense b/c P brought 
					the case so look @ only P
				(4) Termination (term.) Clauses
					1. Express term.--P doesn't have a 
					free way out 
					since cond. out of P's control
					2. Req. P 2 give written notice & 
					specified per. of 
					X--P has legal detriment & D 
					barg'ed 4 it so no IP
					3. Req. P 2 give written notice 
					effective immly--
					even though close 2 freeway out, 
					D still barg'ed 4 writing; min. view holds 
					that its IP
					4. Express but silent on written 
					notice--interp. as 
					rsbl X & interp. so treated like 3rd sit.
					5. P has abs. pwr. 2 term. @ any 
					X w/o writing in 
					expressive terms--real freeway 		
					out so IP
			<2> Pre-existing Duty 
				(1) Formation Arg.--if there's K2 relev. 2 
				K1, then no legal change & no legal detriment
				(2) Perf. Arg.--modification of existing 
				K so pre-exist. duty
			<3> Circumvention of Pre-exist Duty
				(1) Additional / Dif. consid. given 
				(change in X/place)
				(2) P surrendered legal pwr 2 breach in 
				modification of K--ct. doesn't accept this arg.
				(3) Rescinded orig. K
					1. When X lapse btwn rescission 
					of K1 & K2, then 
					K2 doesn't contain any pre-exist 
					duty & effective
					2. Simultaneous rescission & 
					formation of K1 & 
					K2 then need expressed & 
					symbollic 
					destroying of K1 4 K2 2 B effective
					3. Purported modification--split 
					of auth: (1) term. 
					can't B presumed so pre-exist duty 
					(2) implied, incompl. simultaneous, rescission 
					o.k. in mkt & 
					busi. by rsbl stand. of busi. so 
					no pre-exist duty 
					(3) UCC takes (2) 2 beyond mkt so 
					long as pers. prop.
				(4) Party surrendered legal rt. 2 enter 
				into rescind
				(5) 3 Party Sit.
					1. Pers. rt. & duty R correlative
					2. Dif. duty 2 dif. people b/c 		
					duties R pers.al
				(6) Modification w/o consid. b/c 
				customary practice--min.
			<4> Invalid Claim
				(1) P's consid. was invalid so insuff. consid.
					1. If P honestly believed was 
					valid claim, then suff. consid. (subj.)
					2. If P was subj. genuine & obj. 
					rsbl in believing 
					valid claim, then suff. consid. 
					(subj & obj.)
					3. Rest 2§76 says either subj. 
					honest / obj. rsbl:  
					Ct. doesn't accept b/c have bad 
					faith prob.
					4. Surrender of any invalid claim 
					is suff. consid.--split of auth.
				(2) Unliquidated/disputed claims
					1. Don't know the amt. of liab. 
					like tort claims
					2. There's legal rt. 2 go 2 ct. 2 
					settle; hence, if 
					pay part, its consid. 4 that rt.
				(3) Debt compositions
					1. Legal detriment when debtor 
					surrenders legal 
					pwr. 2 prefer 1 creditor over the other
					2. Hence, when give part 2 all 
					the creditors, pwr.2 
					prefer is given as consid. 
				(4) Cashing Checks:  Undisputed 
				Liquidated Claims
					1. Debtor gives check


K's Enforceability Test Outline


The Formation Stage:  Enforceability
  	Def. :  Even if there's valid K, a doc. can render it void, 
	voidable, / unenforceable
  	Statute of Frauds (S/F)
		1) Fn. of S/F
			1. Evidentiary --hard proof of prom.
			2. Cautionary --make parties think
		2) Types of K's w/in the Statutes purview
			1. Spec. collateral / 2ndary proms:  Suretyship
				(1) Principal Debtor (PD) must have @ 
				least valid/voidable duty 2 the creditor
				(2) PD & surety must have surety rel. not 
				jointly agreeing 
				2 B liab. 2 creditor which is primary proms
				(3) Must tell the creditor of the rel. of surety
				(4) Surety must make dir. written agmt 2 
				creditor; suretys 
				prom. 2 PD can B oral since its indemnity
				(5) Exceptions
					1. Dir. Econ. benefit 2 the surety
					2. Surety of the corporation 	
					where I hold stock (split of auth.)
			2.   Consid. of Marriage --not used any more
			3.   Spec. prom. of an executor / adm.
				(1) Really part of 1st type so ct. doesn't 
				like it
				(2) Use own $ instead of the estates
			4.   Executory K 4 sale of realty land & fixtures
				(1) When agmt is still executory
				(2) Unimproved land--everything on it is 
				part of the land
				(3) Industrial crop--fixed 2 land but 
				need energy 2 expand, 
				so personalty, not realty
				(4) C/L of standing timber, minerals, 
				perennial crops--if 
				severed personalty, if attached realty
				(5) UCC §2-107 of standing timber, 	
				minerals, perennial crops
					1. Sub 1--when there's severance 
					by seller, then 
					personalty so the K is 4 goods
					2. Sub 2--when there's severance 
					by buyer, it's 
					personalty K when it can B 
					removed w/o material harm
			5.   K 4 Sale of Personalty
				(1) UCC §2-201 applies 2 goods valued 
				over $500
				(2) Sub 3)a--spec'ly mfgr'ed exception 
				where it's 
				customized item & seller has 2 generate 
				subst. reliance int.; no alt. mkt trxn available
				(3) Pers. service can B det'ed by fair mkt 
				value by experts
				(4) Construction K doesn't fall under 
				realty / personalty clauses
			6.   The 1yr. Clause
				(1) K's that R impossible 2 B perf'ed w/in 
				1 yr.
				(2) In cond'al K's where perf. is possible, 
				even if improbable, ct. will say it doesn't fall 
				under the S/F
				(3) Term. clause can B interp'ed as pers. 
				serv. rendered w/in a yr.
		3) Methods of Compliance
			1. Note/Memorandum (satisfies all S/F Ks)
				(1) Signed by party in charge, D:  1 way st.
				(2) Essential Terms
				(3) ID of all the parties
				(4) Can B informal
				(5) Compl. w/o extrinsic evid.; only D 
				can bring in extrinsic evid. 2 refute P's memo
				(6) Must B correct
				(7) Can accept FUTURE tense lang.
				(8) Piecing Memos
					1. View1 --must B physically attached
					2. View2 --Signed refer 2 
					unsigned writings
					3. View3 --Signed & unsigned 
					refer 2 same subj. matter
				(9) UCC §2-201
					1. Sub 1--Suff. 2 indicate K 4 
					sale was made; quanitity term like duration can 
					B incorr'ly stated so long as there's quantity 
					term 4 K of sale; need @ least PRESENT tense
					2. Sub 2--Must B Merchants; D 
					bound by docs 
					signed by P; need PAST tense of confirmation
					3. Initials suffice as sig. b/c 
					only intend 2 authenticate
			2.   Acceptance & Receipt (goods clause)
				(1) Accept --title; Receipt --physical possn
				(2) Orig. S/F--if accept part of the 
				good, then accept all
				(3) UCC §2-201)3)c--accept & pay only 4 
				part, then that's all that's enforced
			3.   Part Payment (goods clause)
				(1) Orig. S/F--Earnest $ didn't apply 
				toward final price
				(2) UCC--part payment goes toward final price
			4.   Part Perf. (1 yr. clause)
				(1) If a party perf. comp'ly, it lifts the 
				bar & can get expectation int.
			5.   Part Perf. (realty clause)
				(1) If seller already conveyed, then 
				relied so buyer can't raise S/F defense
				(2) If buyer 
					1. Puts some $ down, then can 
					simply return it by restitution
					2. Moves into the prop & improve, 
					then satisfies the S/F
			6.   Admission (goods clause)
				(1) UCC §2-201)3)b--if party against whom 
				the enforcement is sought admits K 4 sale 
				made, K can B enforced
				(2) Encourages purgery so not apply
		4) Effects of Noncompliance
			1. Maj. Unenforceable K
				(1) Need 2 affirmatively plead
				(2) There's possiblity of tort liab.
			2.   Min. Void K
				(1) Gen. denial is suff. 
				(2) Since void K is no K, no possibility 
				of tort liab.
		5) Mitigating Doctrines
			1.   Specif. Restitution
				(1) Put U back prior 2 K in fair mkt 
				value so usually short of K value
				(2) In pers. prop, servs cases
			2.   Equitable Estoppel
				(1) Reliance on misstatement/misrep. of fact
				(2) Expectation int. & lifts the bar of S/F
				(3) Enforce the K
			3.   PE
				(1) Relied on prom. so that theres 
				detrimental change in position
				(2) Must find change in position other 
				than mere loss of benefit of orig. barg.
					1. When mkt shifts & can't enter 	
					the mkt
					2. Even if mkt didn't shift, value 
					went down b/c of the prod. (perishable goods)
					3. Pers. serv. which was consumed
		6) Arg's that P could make
			1. K not in purview of S/F
			2. Even if it was, complied
			3. Even if S/F, didn't comply, D waived defenses
			4. Even if S/F, didn't comply, didn't waive 
			defenses, estoppel doc's lifts the bar of the statute
			5. Even if S/F, didn't comply, didn't waive 
			defenses, entitled 2 
			restitution (doesn't lift the bar & no dir. 
			enforcement of K)
  	Infancy/Minority Doc. :  Status Doc. #1
		1) Who is deemed infant/minor?
			1. C/L --under 21 yrs 
			2. Now --under 18 yrs.
		2) Conseq's of being an infant/minor
			1. Only show was a minor @ the X of entrance 2 K
			2. No need 2 show b/c was a minor, didn't 
			understand K
			3. K's R voidable except in (1) bail bond 
			(enforceable) (2) surety (void)
			4. Ratification must B made after minor status 
n				over by 
				(1) Expressed
				(2) Implied by receiving further 
				additional benefit after minor status is over
				(3) Silence 4 a long per. of X
			5.   Disaffirmance
				(1) In a X'ly fashion
				(2) Only return what the minor still 
				possesses; no need 2 
				put the other party in status quo unless 
				P is a minor
				(3) Full restitution when nec. like 
				food--quasi-K enforceability
			6.   Liab. in Torts
				(1) Tort fraud counterclaim=rsbl value of 
				purchase - rsbl value @ the return
  	Insanity:  Status Doc. #2
		1) Who is Insane?
			1. Congnitive Ability--Trad. C/L 2 test the 
			persons understanding of the nat. & basic conseq. of trxn 
			2. Volitional Test--Rest 2d §15  2 test inability 
			2 control axn; 
			unable 2 act in a rsbl manner & the other party 
			knows of the full fledged psychosis
			3. K test now--Cog. + Volitional tests
			4. Only need 2 show mental illness exists & it 
			impacts rsn'ing & capacity
		2) The Conseq's of Insanity
			1. Void v. Voidable:  If gen. guardian before K, 
			then void, but if 
			limited guardian (guardian ad litem), then voidable
			2. Only guardians can ratify unless fully recover 
			from insanity & demonstrates full recovery
			3. In disaffirmance, insane P's must put the other 
			side full status quo ante
			4. Quasi K enforced where essential nec. of food, 
			shelter, clothes
  	Intoxication:  Status Doc. #3
		1) Rest 2d §16
			1. Voidable K where other party must have rsn 2 know
			2. Either unable 2 understand OR unable 2 act
  	Duress: Curb Extortion
		1) Physical
			1. Used when someone resort 2 actual use/threat 2 use 
			crim/tortious means 2 extort 1 sided modification
			2. No reqt 2 show rsbly resistance 2 physical harm
			3. Subj. stand.
		2) Econ (ED)
			1. Breach of K enough; no reqt of crim cond.
			2. Est'ed 4 the need of real assent
			3. Pre-exist duty rule used less against extortion 
			so needed (ED)
			4. Remedy 4 pre-exist duty rule limited 2 not paying 
			future 
			payment not getting back $
			5. Elements of ED
				(1) Illegal threat / act--breach of K is enough
				(2) Illegal threat/act placed D in dire econ. 
				sit.
				(3) P delib'ly capitalized on D's sit; improper 
				demand
				(4) D yielded 2 P's demand of illegal act/threat 
				(subj.)
				(5) D acted rsbly in yielding 2 P's demand (obj.); 
				b/c pressure is fact of life in mkt place 
				(6) D had no other choice than yielding; factor 
				of (5) 
			6.   Voidable K
				(1) Must look @ P's subseq. axns 2 det. if ratified
				(2) Delay isn't implied ratification
			7.   Scope of Rev. 2 Dec. Rsblness
				(1) Pure quest. of law--appellate only recog. 
				elements of duress
				(2) Pure quest. of fact--trial only look @ 
				facts
				(3) Mixed quest. of law & fact--policy involved 
				in dec'ing if 
				axn was rsbl; middle spectrum on dec'ing abuse 
				of discretion
			8.   Policy Bias--Favor innocent party in close quest. 
			of ED
  	Fraud/Misrepresentation
		1) Intentional Misrep
			1. The test of pure heart, empty head--innocent must 
			have subj. honest but can have obj. unrsbl S/M
			2. Guilty party had intention 2 misrep.
			3. Does not have 2 B material aspect of the trxn
			4. Legal conseq. of punitive damage since intentional 
			tort
		2) Negligent Misrep.
			1. Statement must B false
			2. Must B material part of the trxn
			3. Objly rsbl belief
			4. Legal conseq. of only limiting 2 not enforcing the 
			K
  	Mistake
		1) General Norm
			1. Unilateral Mistake--K enforced unless other side 
			induced mistake / knew of the mistake
			2. Mutual Mistake
				(1) K void/voidable unless 1 party assumed 
				the risk of the mistake
				(2) Mistake rel. 2 same issue/same part of 
				the trxn
				(3) Material mistake/imp. in trxn
		2) Intrinsic Error
			1. Oral Words--inattentive then unilateral mistake 
			(UM) & enforced
			2. Contents of Writing--1 term written but think another, 
			UM & enforced
			3. Slip of the tongue--intent 2 say 1 but says another; 
			UM & enforced
			4. Terms of the Communication
				(1) If offeror called before telegraphing, 
				then offeree can't snap up mistaken offer 
				(2) If teleg. viewed as indep. contractor, 
				then mutual mistake (MM) & both can disaffirm
				(3) If teleg. viewed as offerors agent, then 
				UM
				(4) Most ct's say offerors agent b/c chose it
			5.   Meaning
				(1) Understood & said same words but dif. meanings 
				attached by parties
				(2) If 1 party more @ fault b/c should've known 
				/in better position, then UM & enforced
				(3) If both were equally innocent, then MM 
				& not enforced
		3) Extrinsic Error
			1. Subj. matter was mistaken (infertile cow v. pregnant 
			cow)
			2. In MM, K enforced when a party has assumed the risk 

				(1) Consciously disregarding risk/gambling 
				S/M
				(2) Can't infer neg. on P's part but conscious 
				disregard
				(3) Must know that don't know it's valuable
				(4) Conscious that pertinent fact may not B 
				true
			3.   Trade custom must B universal not widespread 2 
			say that foregoing it is assuming risk
			4.   Punitive damages 4 conscious disregard
		4) Assumption of Risk in UM
			1. Assumption of risk isn't imposed in UM
			2. Rest 2d§153, must impose assumption of risk even 
			in UM but doesn't make sense
			3. Gambler is less liab. than defrauder in UM
		5) Mistake in Collateral Assumption of Fact:  Gen. contractor 
		cases
			(1) Limitation on pwr. 2 revoke in contractor cases 
			by statute 
			(2) Statutory Construction
				1. Statute --specif. lang. & can B changed 
				ez'ly by leg. so origionalism
				2. Const. --open text & can't change as ez'ly 
				so dynamic
			(3) View1 
				1. K enforced in UM unless there's excessive 
				hardship & granting relief doesn't result in prejudice 
				against other party
				2. Prejudice must B more than mere loss of 
				the benefit of the barg.
			(4) View2
				1. K not enforced if material part, no neglect 
				of legal duty, prompt notice of mistake, enforce 
				is unconscionable, & can put 2 statuts quo ante
				2. Dif. test b/c can document the mistake so 
				greater confidence there's mistake
		6) Mistake in Econ Value
			1. Usually don't grant relief & enforce K
			2. Econ. value is subj. & there's inherent risk
			3. Exception when 1 party holds 2 B expert & in fiduciary 
			where U R beneficiary of trust
  	Economic Enadequacy of Consideration in Equity
		1) Special Equitable Remedies
			1. Specific Decree--perf. the K in K cases
			2. Injunctions --prohibitory order not 2 perf. the 
			act in torts cases
			3. Conseq's of not perfing the orders--go 2 jail; liberty 
			taken away
		2) Special Equitable Reqt
			1. B/C take away liberty, must prove legal cts remedy, 
			$ judgment is inadeq.
				(1) Intolerable uncertainty in computation 
				of $ judgment b/c of uniqueness of prod.
				(2) Inability 2 cover given the mkt sit.; theres 
				no subst.  available even if can get $ judgment
		3) Special Equitable Defenses 4 D
			1. Econ. adeq. of consid.
			2. Maj. --do NOT recog. econ. inadeq. consid. @ all 
			/ only if + factor of quasi-duress/fraud
				(1) Inducing pub. official
				(2) Illegal act
				(3) Collusive bidding in pub. K
				(4) Common denominator--illegality
			3.   Paves the way 4 Unconscionability




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