University of Georgia Terry College of Business LS 470 - Business Law I Dr. B-A's Word Outlines CONSIDERATION 1. Definition bargained for legal detriment exchanged between the parties adequacy not questioned, unless fraud involved 2. Illusory promises - appears to be, but isn't promise not good consid UCC - reqirement and output - contracts ok must meet requirements in gf 3. Pre-existing legal/contractual obligation not good consid if duty changed in any way, consid present A. Contract modification 1. C/L - gen new consid nec for modif (3 exceps) and th4 no new consid nec a. new or diff duties - new promise suff consid for modif b. unforseeable difficulties arise Gen difficulties do not excuse performance if difficulties were unforseen and promise to pay more because of them, the promise (modification) is enforceable w/o further consid. Difficulties must be extraordinary, not just higher prices, strike etc., bec those are foreseeable c. contract is rescinded then no prior duty exists new contract must be formed, w/modification as a term 2. UCC - no consid nec pties must mutually agree to modify modificatn must be requested in good faith rather than to take advantage of other pty Pty can require modifs to be in writing if so, this contract provision must be separately signed if not separately signed, other pty can rely on oral modification 2. Discharge of liquidated debts no dispute regarding debt agmt to pay less in full satisf of liq debt lacks consid unenforcbl since pre-existing duty to pay full debt if evid (e.g., cancelled note, pd-in-full receipt) creditor intended release fr unpaid balance to be a gift, will be effective paying earlier, at another place than agreed or despite bkrcy may be enough consid to support pmt of lesser sum creditor can still recover remaining amount, tho agreed to take less 3. Discharge of unliquidated debts debt disputed - pties know debt exists not sure how much or manner of pmt. etc. pmt of less in full satisfactn settles the debt consideration is the pmt of amt one isn't sure is owed pty can't recover remaining amount 4. Accord & Satisfaction for disputed debts only accord - agmt to take less or diff consid in full pmt satisfaction - pmt & rec of agreed consid if both done, debt dischgd and pty can't sue for remainder 5. Past Consideration insufficient to support a promise promise will be unenforceable 6. Promissory estoppel substitute for consid promisor must induce promise to rely upon promise made reliance by promisee must be justifiable non-breaching pty must move in reliance upon promise non-breaching pty must stand to suffer harm breaching pty must be unjustly enriched damages limited to harm suffered, not contract price 7. Moral obligation not good consideration material benefit rule - if w/o a promise from pty-1, pty-2 performs act for which compensatn wd generally be given, and which provides a material benefit for pty-1, pty-1 must pay, i.e., p-2 saves p-1's life and p-1 promises a reward 8. Promise to pay debt barred by stat of lim or bkrcy enforceable w/o consid new promise to pay debt barred by bkrcy must be in writing 9. Merchant's firm offer - needs no consideration 10. Written & deliv renunciation - needs no consideration 11 Gratuitous promises - no good as consideration