Chapter 14
Summary
TLDRIn this educational video, the concept of 'consideration' in contract law is explored, distinguishing it from its everyday meaning of kindness or empathy. The script explains that consideration is an essential element of a contract, representing the exchange of value between parties. It clarifies that forbearance from illegal activities does not constitute valid consideration. The lecture uses relatable examples, such as trading a Malibu condo for sobriety, to illustrate the necessity of a bargained-for exchange. It also covers scenarios like promissory estoppel and part payment of checks, emphasizing the importance of understanding the elements of a contract to avoid legal pitfalls.
Takeaways
- π Consideration in law is different from its everyday meaning; it refers to what each party gives up in a contract.
- π€ For a contract to be valid, there must be an offer, acceptance, and consideration.
- π° Consideration can be money, services, property, or the forbearance of a legal right.
- π An example of consideration is forbearing from drug use in exchange for a valuable asset like a Malibu condominium.
- β Forbearance from an illegal act does not count as consideration because it's not a legal right.
- π« Courts do not determine the adequacy of consideration; it's up to the parties involved in the contract.
- π The concept of forbearance involves giving up a legal right in exchange for a promise.
- π‘ An example of a pre-existing legal obligation is a police officer's duty to patrol a neighborhood.
- π« Cashing a part payment check can be seen as accepting a counteroffer, potentially forfeiting the balance owed.
- π The doctrine of promissory estoppel can apply when there's no consideration, with four specific elements required.
- π Homework for chapter fourteen involves applying concepts like promissory estoppel and forbearance.
Q & A
What does 'consideration' mean in regular English as opposed to legal terms?
-In regular English, 'consideration' means kindness, empathy, thoughtfulness, but in legal terms, it refers to what each party to a contract gives up to the other party in making their agreement, essentially a bargain for exchange.
Why is consideration necessary for a contract?
-Consideration is necessary for a contract because it ensures that there is a bargain for exchange between the parties. Without consideration, there is no enforceable contract, as it would merely resemble a gift.
What are the elements of a contract as mentioned in the script?
-The elements of a contract mentioned in the script include an offer, acceptance, and consideration.
What is the difference between a gift and consideration?
-A gift is a voluntary transfer without receiving anything in return, whereas consideration involves giving or promising something of value in exchange for the performance or promise of performance to the other party.
Can forbearance be considered as a form of consideration?
-Yes, forbearance can be a form of consideration if it involves giving up the right to do something one has a legal right to do in exchange for a promise of something else.
What is an illusory promise according to the script?
-An illusory promise is a promise that is not enforceable because it lacks consideration or is not based on a genuine intention to be bound by the promise.
What is a pre-existing legal obligation and how does it relate to consideration?
-A pre-existing legal obligation is a duty that one is already required to fulfill by law, and it cannot serve as consideration because it does not involve giving up something of value that one has a legal right to withhold.
What happens if you cash a check that is marked 'payment in full' but only covers part of the agreed amount?
-Cashing such a check is considered accepting a counteroffer and implies that you have accepted the part payment as full settlement, thus losing the right to claim the balance.
What are the four elements of promissory estoppel?
-The four elements of promissory estoppel are: 1) A promise made without consideration, 2) The promisor should reasonably expect the promisee to rely on the promise, 3) The promisee does rely on the promise in a substantial manner, and 4) Enforcement of the promise is necessary to avoid injustice.
How can promissory estoppel be applied in scenarios where consideration is missing?
-Promissory estoppel can be applied when all four elements are present, allowing a court to enforce a promise despite the absence of consideration, to prevent injustice and protect those who have detrimentally relied on the promise.
What is the importance of distinguishing between a gift and consideration in contract law?
-The importance lies in determining whether an agreement is enforceable as a contract. A gift does not create a contract, whereas consideration is a necessary element for a contract to be legally binding.
Outlines
π Understanding Contractual Consideration
The paragraph introduces the concept of consideration in contract law. It explains that while in everyday language, consideration means kindness and empathy, in legal terms, it refers to something of value exchanged between parties to form a contract. The script clarifies that without consideration, there is no contract, and it illustrates this with examples, including a humorous one about forbearing drug use in exchange for a Malibu condominium. It also discusses the necessity of the value given or promised to be legal, contrasting scenarios where drug use is illegal versus legal. The importance of a bargained-for exchange is emphasized, and examples are provided to distinguish between gifts and consideration.
π‘ Consideration in Real-life Scenarios
This section uses a hypothetical scenario involving a child cleaning their room in exchange for a trip to Disneyland to explain the concept of consideration. It underscores the need for a written agreement to provide evidence of the contract. The paragraph further delves into the concept of forbearance as consideration, where one gives up a legal right in exchange for a promise. It also touches on the idea of pre-existing legal obligations versus new agreements, using the example of a police officer's duty to patrol a neighborhood. The script warns against accepting partial payments that imply full settlement, as this could negate the remainder of a debt owed.
π Applying Promissory Estoppel
The final paragraph focuses on the doctrine of promissory estoppel, which can be applied when consideration is missing from a contract. It outlines the four elements needed for this doctrine: a promise made without consideration, the promisor's expectation of reliance, actual reliance by the promisee in a substantial manner, and the necessity of enforcing the promise to avoid injustice. The script encourages students to apply this concept to homework scenarios, providing guidance on specific questions where promissory estoppel should be considered. It concludes with a reminder of the importance of all three elementsβoffer, acceptance, and considerationβfor a valid contract.
Mindmap
Keywords
π‘Consideration
π‘Contract
π‘Offer
π‘Acceptance
π‘Forbearance
π‘Gift
π‘Pre-existing Legal Obligation
π‘Promissory Estoppel
π‘Counteroffer
π‘Detriment
π‘Bargain for Exchange
Highlights
Consideration in the legal world is different from its everyday meaning; it refers to what each party gives up in a contract.
Consideration is a bargain for exchange, and without it, there is no contract.
Consideration can be money, services, property, or the forbearance of a legal right.
For consideration to exist, something of value must be given or promised in return for performance.
The court does not determine the adequacy of consideration; it is up to the parties involved.
Giving up a crime is not valid consideration because it is not a legal right.
If a legal right is given up, it can be valid consideration.
An example of a valid consideration is cleaning a house in exchange for a condominium.
A contract requires a bargained-for exchange, distinguishing it from a gift.
An enforceable contract must have offer, acceptance, and consideration.
Promissory estoppel is a legal theory that can remedy a situation where consideration is missing.
Promissory estoppel has four elements: promise, reliance, detriment, and injustice.
Part payment of a check can be a counteroffer, accepting it may forfeit the right to the full amount owed.
Forbearance as consideration means giving up a legal right to do something in exchange for a promise.
A pre-existing legal obligation cannot be used as consideration.
An example of valid consideration is a police officer agreeing to guard a house on their off-duty time.
Homework assignments involve applying promissory estoppel and understanding forbearance as consideration.
The importance of having all three elements (offer, acceptance, and consideration) for a valid contract is emphasized.
Transcripts
good morning everyone and welcome to
chapter fourteen please open your
textbook to page 263 and let's talk
about consideration in regular English
consideration means kindness empathy
thoughtfulness guess what that is not
what it means in the legal world
consideration on page 263 is what each
party to a contract gives up to the
other party in making their agreement
it's a bargain for exchange if you don't
have consideration you don't have a
contract it'll look just like a gift so
here are the elements of contract
there's an offer there's an acceptance
and at the bottom of the triangle
there's consideration so there's an
offer or the person making the offer the
offer II the person to whom the offer is
made and consideration now consideration
is the bargain for exchange between the
parties in order for it to exist
something of value must be given or
promised in return for the performance
of promise of performance to the other
the value given or promised can be money
it can be services property or the
forbearance of a legal right you have to
be forbearing from something you have a
legal right to do if you are shooting up
heroin and sucking up LSD and your
parents are freaking out or your wife or
spouse or significant other is freaking
out like oh my god you're gonna kill
yourself and you've taken him to therapy
nothing's working and they're the
business type there has to be something
in it for them so you enter into a
contract with them your the offer or and
you say if you forbear which means to
hold back from doing an act to not do
something if you forbear from shooting
up heroin and you forbear from dropping
LSD I will give you my condominium in
Malibu right on the ocean next to the
movie stars well that seems like a
pretty big bargain do you is four
barring from heroin and LSD
consideration enough in exchange for the
condominium in Malibu California if the
parties feel it is that's all that
matters the court does not jump in and
tell people what is adequate
consideration they leave it between the
parties do you have a legal right to
shoot up heroin and drop LSD No
so guess what it would not be
consideration enough because you don't
have a legal right to do it in the first
place now if the bargain was this I will
you will clean my house every week in
exchange for me giving you my
condominium you have a legal right to
not clean someone's house therefore you
would be giving up something of value
that you have a legal right not to do if
someone gives up a crime they're not
giving up anything that they have a
legal right to do because a crime is
something you don't have a legal right
to do now if LSD and heroin were
legalized and they were legal and you
agreed to give them up in exchange for
the Malibu condominium then that would
be consideration so you have to be gifts
giving something up of legal value for
forbearance now let's look at the
example on page 263 under the wards
bargain for exchange Beth offers to pay
Carrie a hundred dollars for her youth
skis Carrie accepts Beth has promised
something of value which is what the
hundred dollars in exchange for Carrie's
promised to sell those skis and Carrie
has promised best something of value of
the skis as consideration for the $100
if Carrie offered to give Beth the u.s.
keys and Beth accepted these parties
would have an agreement but not an
enforceable contract because Beth did
not give or did not provide any
consideration in exchange for Carrie's
promise there was no bargained for
exchange that's the key to consider
you need a bargained for exchange
because Kerry was not promised anything
of value so having a bargain for
exchange makes it not a gift if you say
to your child if you keep your room
clean for the next seven months till
Christmas you keep it completely clean
vacuum dusted all your toys off the
floor mommy will take you to Disneyland
with Grandma and your child just makes
the room so clean the next 7 months it's
almost like a hospital in there the
Legos are picked up everything's tidy
and then at Christmas time you must take
your child to Disneyland because they
have a legal right technically not to
pick up their room now might be tricky
to be enforceable because you'd have to
have evidence of the agreement but if
you have a smart child which I'm sure
you will after this class they're going
to take a piece of paper out say hi mom
hi dad or whoever is in this bargain
please write down here that I party the
first part hereby agree that if Johnny
jerk or Joanne jerk in Homer I clean my
room for the next 7 months totally clean
and span and I never miss a day
then when the holidays come you agreed
to take me to Disneyland please sign
here and date it now you have offer
acceptance and consideration the bargain
for exchange is cleaning in exchange for
a trip to Disneyland
both have both of those are legal rights
you have a legal right not to take your
child to Disneyland and they have a
legal right not to keep the room clean
technically although you may be living
in a dictatorship but once you enter
into a contract you've kind of made it a
more democratic situation all right
so read at the bottom of page 263 the
difference you want to be able to
distinguish or tell the difference
between a gift and consideration turning
to page 265 you'll read about
forbearance as consideration forbearance
is giving up the right to do something
you have a legal right to do in exchange
for the promise of something else may
sure you know what an illusory promise
is let's go to page 266 and talk about a
pre-existing legal obligation what is
that
sometimes it's called a pre-existing
legal duty if I work for the police
department I am a police officer let's
pretend and I have to patrol a certain
area a certain neighborhood and my
patrol is Monday through Friday but you
have a big fancy mansion on that street
and you want your house to be patrolled
a little bit more than the other homes
and you step out of your home you say
hey I'll give you an extra five hundred
bucks if you really circle my house a
bit more than the others can I as an
officer do that I hope you're yelling no
at your screen right now no because
every single person's tax dollars go to
pay that officer Monday through Friday
to patrol that neighborhood evenly for
everyone now I'm going to change the
facts watch YES on Saturday and Sunday I
don't work I'm off it's my own time as
an officer I can do whatever I want and
you approach me you say look on Saturday
and Sunday when you're a free agent I
would like to pay you an extra $250 per
day to sit outside my house and watch it
so that I don't get robbed then you are
off the clock and you do not have a
quote pre-existing legal duty therefore
you are giving up something you're
giving up your free time your unpaid
free time in exchange for money
someone's giving you money and you're
giving them labor and security but if
you were under a pre-existing legal
obligation it would not count so make
sure you read page 266 they give a very
good example they're at the bottom of
the page where it talks about Officer
Mary Rogers make sure you understand
that also read the case summary on the
top of page 267 where it says you're
already under a contract make sure you
understand
and also the bottom of page 267 the case
summary all right looking at page 268
part payment of checks if someone owes
you money let's say you put in a new
radiator or transmission to a friend's
car and you said look I'll put it in for
$300 because you're my friend just buy
the transmission in the radiator and
I'll put it in cuz I'm a mechanic and I
know how to do it so your friend writes
you a check for 150 instead of 300 and
you foolishly cash that check and in the
memo portion of the check your friend
writes payment in full for installation
of radiator and transmission if you cash
that check that is a counteroffer and
you have accepted that part payment as
payment in full so if you get a part
payment check that isn't the right
amount do not cash it because then you
will have accepted a counteroffer and
you'll be out of luck for the balance of
what's owed to you let's go to the
bottom of page 270 there's a legal
theory called promissory estoppel it has
four elements I want you to know all
four elements promissory estoppel is
when consideration has been missing in a
situation and the court is looking for a
way to remedy a problem there's four
elements under the doctrine of
promissory estoppel a promise or that's
the person making the promise may be
prevented from asserting that his or her
promise is not enforceable because the
promise he gave no consideration for the
promise this doctrine is sometimes also
called
the doctrine of detrimental reliance
it's applicable when one element number
one the promise or makes a promise that
lacks consideration element number two
the promise or intends or should
reasonably expect that the promise he's
going to rely on the promise element
number three the promise he in fact does
rely on the promise in some very
definite and substantial manner and
element number four the enforcement of
the promise is the only way to avoid
injustice in every single
theory not just promissory estoppel you
must prove that all the attendant
elements are there in order to say that
the legal theory is there so every
single legal theory that we learn in in
the law has elements and the job of the
legal eagle is to show that each element
is actually in the scenario and if it is
then you can use that legal theory for
help now in the homework I want you to
see on page 272 273 and also 274 that
you're going to apply the promissory
estoppel in a couple of scenarios let me
show you where you're going to apply
promissory estoppel in question number
five okay make sure you understand
question number five and use the four
elements of promissory estoppel there
you're going to apply promissory
estoppel in question number 15 on page
274 make sure you use promissory
estoppel to help that family you're
going to look at part payment of cheque
for question number twelve when the lady
gets her Volkswagen repaired and doesn't
pay the full amount let me see what else
I want to show you you're going to look
at forbearance as consideration in
question number fourteen so there's a
few hints on how to do chapter fourteen
enjoy learning about consideration and I
wish you a really happy effort at this
it's a lot of fun learning about
consideration remember the most
important thing about it is if you don't
have an offer and acceptance and
consideration all three elements you
don't have a contract have a great day
thanks for hanging out with me bye
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