ConsiderationConsideration: something of legal value given in
exchange for a promiseNecessary for the existence of a
contractElements:Something of legal value must be givenThere must
be a bargained-for exchange
11-2
ConsiderationLegal valueA contract is considered supported by
legal value if:The promisee suffers a legal detrimentThe promisor
receives a legal benefitMost commonly involves tangible payment or
performance of an act
11-3
ConsiderationBargained-for exchangeProcess of bargaining or
inducement that leads to an enforceable contractNaturally present
in most commercial transactions11-4
Gift PromiseGratuitous promisesUnenforceable due to lack of
considerationPromise freely given and not induced by promise of
some benefitCompleted gift promises are not revocable11-5
Case 11.2: Gifts and Gift PromisesCaseCooper v. Smith800 N.E.2d
372, Web 2003 Ohio App. Lexis 5446 (2003)Court of Appeals of
OhioIssueCan Cooper recover the gifts or the value of the gifts he
gave to Julie and Janet Smith?11-6
Promises that Lack ConsiderationIllegal considerationIllusory
promisePreexisting dutyPast consideration11-7
Promises that Lack ConsiderationIllegal considerationA promise
to refrain from doing an illegal actIllusory promiseA contract that
both parties enter, but one or both of the parties can choose not
to perform their contractual obligations
11-8
Promises that Lack ConsiderationPreexisting dutyA promise to do
something the party is already under an obligation to doarises when
one party to an existing contract seeks to change the terms of the
contract during the course of its performance
11-9
Promises that Lack ConsiderationPast considerationA prior act or
performance that does not support a new contractProblems of past
consideration often arise when a party to a contract promises to
pay additional compensation for work done in the past11-10
Special Business ContractsOutput contract: a contract in which
the seller agrees to sell all of its production to a single
buyerPurposesAssuring the seller of a purchaser for all its
outputAssuring the buyer of a source of supply for the goods it
needs
11-11
Special Business ContractsRequirements contract: a contract in
which a buyer agrees to purchase all of its requirements for an
item from one sellerPurposesAssuring the buyer of a uniform source
of supplyProviding the seller with reduced selling costs11-12
Special Business ContractsBest-efforts contract: A contract
which contains a clause that requires one or both of the parties to
use their best efforts to achieve the objective of the contract
11-13
Equity: Promissory EstoppelPromissory estoppel: An equitable
doctrine that prevents the withdrawal of a promise by a promisor if
it will adversely affect a promisee who has adjusted his or her
position in justifiable reliance on the promiseAlso known as
detrimental reliance11-14
Equity: Promissory EstoppelElements to be provenThe promisor
made a promiseThe promisor should have reasonably expected that
promisee would rely on the promiseThe promisee actually relied on
the promise and engaged in an action or forbearance of a right of a
definite and substantial natureInjustice would result if the
promise were not enforced
