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George Mason School of Law

George Mason School of Law. Contracts I IX. Consideration F.H. Buckley fbuckley@gmu.edu. Six Questions. Defining Consideration: Benefit-Detriment and Bargain Tests The Effect of a Seal The Adequacy of Consideration and Nominal Consideration The Past Consideration rule

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George Mason School of Law

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  1. George Mason School of Law Contracts I IX. Consideration F.H. Buckley fbuckley@gmu.edu

  2. Six Questions • Defining Consideration: Benefit-Detriment and Bargain Tests • The Effect of a Seal • The Adequacy of Consideration and Nominal Consideration • The Past Consideration rule • The Relevance of Motive • “Mutuality of Obligation”

  3. The need for a consideration • Restatement § 17(1) • The formation of a contract requires a bargain in which there is … a consideration

  4. The need for a consideration • Restatement § 17(1) • The formation of a contract requires a bargain in which there is … a consideration • Why doesn’t it say: The parties may invoke binding contractual sanctions whenever they want?

  5. The need for a consideration • Restatement § 17(1) • The formation of a contract requires a bargain in which there is … a consideration • Why doesn’t it say: The parties may invoke binding contractual sanctions whenever they want?

  6. The need for a consideration • Restatement § 17(1) • The formation of a contract requires a bargain in which there is … a consideration • Why doesn’t it say: The parties may invoke binding contractual sanctions whenever they want? • Or does it say that?

  7. Defining consideration • Hamer v. Sidway at 43

  8. Hamer v. Sidway at 43 The nephew was going to the dogs…

  9. Hamer v. Sidway at 43 • What is the benefit-detriment standard?

  10. Hamer v. Sidway at 43 • What is the benefit-detriment standard? • Benefit to promisor • Detriment to promisee

  11. Hamer v. Sidway at 43 • Restatement 71(3)(b). The performance may consist of … a forbearance

  12. Hamer v. Sidway at 43 • What is the benefit-detriment standard? • Do we have to ask whether it was a costly detriment? • Or whether it was a real benefit to the uncle?

  13. Hamer v. Sidway at 43 • What is the benefit-detriment standard? • Can you suggest why the uncle might have intended that the promise be legally enforceable?

  14. Kirksey at 132 • Why did Isaac invite Antillico to Talladega county?

  15. Kirksey p. 132 • Why did Isaac invite Antillico to Talladega? It wasn’t to see the speedway…

  16. Kirksey at 132 • Why did Isaac invite Antillico to Talladega county? • Williston’s tramp at 134? • A Benefit to Isaac?

  17. Kirksey at 132 • Why did Isaac invite Antillico to Talladega county? • A detriment to Antillico?

  18. Kirksey at 132 • Do you think Isaac intended legal liability? • And is that determinative?

  19. George Mason School of Law Contracts I IX. Consideration F.H. Buckley fbuckley@gmu.edu

  20. Six Questions • Defining Consideration: Benefit-Detriment and Bargain Tests • The Effect of a Seal • The Adequacy of Consideration and Nominal Consideration • The Past Consideration rule • The Relevance of Motive • “Mutuality of Obligation”

  21. Hamer v. Sidway at 43 The nephew was going to the dogs…

  22. Kirksey at 132 • Why did Isaac invite Antillico to Talladega county?

  23. The need for a consideration • Restatement § 17(1) • The formation of a contract requires a bargain in which there is … a consideration

  24. How to define consideration? • Benefit-detriment • Bargain theory • Intention to create legal relations

  25. Benefit-Detriment • Do the cases up to now all fit under the benefit-detriment standard? • Hamer v. Sidway (consideration) • St. Peter (consideration) • Kirksey (no consideration)

  26. St. Peter v. Pioneer at 45 • Why didn’t the theatre restrict bank night to paying patrons?

  27. St. Peter v. Pioneer • What were Pioneer’s arguments?

  28. St. Peter v. Pioneer • How was the Π to accept?

  29. St. Peter v. Pioneer • How was the Π to accept? • Unilateral and Bilateral contracts

  30. St. Peter v. Pioneer • Can you articulate why the theatre might have wanted the promise to be binding?

  31. St. Peter v. Pioneer • Can you articulate why the theatre might have wanted the promise to be binding? • Recall Lefkowitz

  32. St. Peter v. Pioneer • Can you articulate why the theatre might have wanted the promise to be binding? • Williston’s tramp at 134? • A Benefit to Pioneer?

  33. St. Peter v. Pioneer • “The requested acts were bargained for” • Restatement § 72: “Any promise which is bargained for is consideration”

  34. The Bargain Theory • How would you define bargains?

  35. The Bargain Theory • How would you define bargains? • The promisor must seek the consideration in exchange for his promise

  36. The Bargain Theory • How would you define bargains? • Is it broader or narrower than the benefit/detriment theory?

  37. The Bargain Theory • How would you define it? • You and I want to set a date for lunch but quarrel over the date. Is this bargaining?

  38. The Bargain Theory • Do the cases up to now all fit under the bargain standard? • Hamer v. Sidway (consideration) • St. Peter (consideration) • Kirksey (no consideration)

  39. What is the role of intention to create legal relations? • Restatement § 21: Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.

  40. What if there’s no bargain:Gratuitous Promises • Uncle Ebenezer might want to bind himself? So how does he do so?

  41. What if there’s no bargain:Gratuitous Promises • Uncle Ebenezer might want to bind himself? So how does he do so?

  42. What if there’s no bargain:Gratuitous Promises • Actual gifts (as opposed to promises) are effective if: • Donative intent (animus donandi), and • Delivery by donor, and • Acceptance by donee

  43. What if there’s no bargain:Gratuitous Promises • What constitutes delivery by donor? • Actual delivery of gift • Constructive delivery (e.g. key to car or house) • Deed of gift

  44. Gratuitous Promises andContracts under seal

  45. The seal • Definition: Restatement § 96: “a manifestation in tangible and conventional form” • Effect of seal: Restatement § 95(1)(a): “binding without consideration if it is in writing and sealed”

  46. The decay of formality

  47. Abolition of seals • UCC 2-203 • Abolition in half the states

  48. Adequacy • Would courts ever look at an imbalance in the value of the respective considerations? • Not in contracts under seal • Elsewhere?

  49. Adequacy • Restatement § 79. ADEQUACY OF CONSIDERATION. If the requirement of consideration is met, there is no additional requirement of • (a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or • (b) equivalence in the values exchanged

  50. Wolford v. Powers 145 • What was the consideration from the Wolfords?

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