Chapter 14

Summary

In 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

• 📚 Consideration in law is different from its everyday meaning; it refers to what each party gives up in a contract.
• 🤝 For a contract to be valid, there must be an offer, acceptance, and consideration.
• 💰 Consideration can be money, services, property, or the forbearance of a legal right.
• 🏠 An example of consideration is forbearing from drug use in exchange for a valuable asset like a Malibu condominium.
• ❌ Forbearance from an illegal act does not count as consideration because it's not a legal right.
• 🚫 Courts do not determine the adequacy of consideration; it's up to the parties involved in the contract.
• 🔄 The concept of forbearance involves giving up a legal right in exchange for a promise.
• 🏡 An example of a pre-existing legal obligation is a police officer's duty to patrol a neighborhood.
• 🚫 Cashing a part payment check can be seen as accepting a counteroffer, potentially forfeiting the balance owed.
• 📖 The doctrine of promissory estoppel can apply when there's no consideration, with four specific elements required.
• 🎓 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

00:00

📚 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.

05:01

🏡 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.

10:01

📖 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 elements—offer, acceptance, and consideration—for a valid contract.

Keywords

💡Consideration

In the context of the legal world, 'consideration' refers to something of value that each party to a contract gives up to the other party in making their agreement. It is a key element in forming a legally binding contract. It could be money, services, property, or even the forbearance of a legal right. For example, in the script, the lecturer explains that if a person agrees to stop using drugs in exchange for a condo, this is valid consideration because the person is giving up something of value they have a legal right to do.

💡Contract

A 'contract' is a legally binding agreement between two or more parties. It typically involves an offer, acceptance, and consideration. The video script emphasizes that without consideration, there is no contract, and the agreement would resemble a gift rather than a legally enforceable contract.

💡Offer

An 'offer' is a proposal made by one party with the intention of creating a contract. It is the first step in the formation of a contract. In the script, the lecturer mentions that an offer is made by the 'offeror' to the 'offeree', and it must be accompanied by consideration to form a contract.

💡Acceptance

'Acceptance' is the unambiguous agreement to the terms of an offer, which, along with consideration, completes the contract formation process. The script explains that acceptance must be explicit and align with the original offer for a contract to be valid.

💡Forbearance

'Forbearance' as consideration refers to the act of refraining from a legal right in exchange for a promise. The script provides an example where a person agrees to stop using drugs in exchange for a condo, which is considered giving up a legal right (assuming drugs are legal in the scenario) for something of value.

💡Gift

A 'gift' is a voluntary transfer of property or money without anything given in return. The script contrasts gifts with contracts, noting that a gift lacks consideration and therefore is not a legally binding contract.

💡Pre-existing Legal Obligation

A 'pre-existing legal obligation' is a duty that a party already has, which cannot be used as consideration for a new contract. The script gives the example of a police officer who cannot accept extra payment to patrol a specific house more frequently during their regular working hours because it's part of their existing duty.

💡Promissory Estoppel

'Promissory estoppel' is a legal doctrine that can make a promise enforceable even without consideration, if the promisor should reasonably expect the promisee to rely on the promise, and the promisee does rely on it to their detriment. The script outlines four elements of promissory estoppel and its application in certain scenarios.

💡Counteroffer

A 'counteroffer' occurs when a party accepts part of an offer but changes the terms, effectively making a new offer. The script warns against cashing a part payment check with the notation 'payment in full' as it can be seen as accepting a counteroffer and losing the right to the full amount owed.

💡Detriment

'Detriment' in the context of promissory estoppel refers to the harm or loss suffered by the promisee who has relied on a promise made without consideration. The script mentions that the promisee must have relied on the promise in a substantial way for promissory estoppel to apply.

💡Bargain for Exchange

A 'bargain for exchange' is the mutual exchange of promises that forms the essence of a contract. The script emphasizes that for a contract to be enforceable, there must be a bargain for exchange, meaning both parties give and receive something of value.

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