can some one help me with this exam .i will attach all the notes that you need to answer the questions.

Consideration and Promissory Estoppel

“The law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal. It takes a broader view today. A promise may be lacking, and yet the whole writing may be “instinct with an obligation,” imperfectly expressed.”

Justice Cardozo

I. Teacher to Teacher Dialogue

Consideration is the second of the four elements of a contract. Spotting consideration, in a contractual setting, sounds easier than it really is. When consideration is missing, the result is not necessarily an absence of a contract. Perhaps an historical footnote on the issue may be of value. Consideration is that element of a contract that is designed to show the underlying inducement to enter into the contract. It is meant to place value on the contract in order to assure evidence of a bond between the parties. In the Middle Ages, contracts between members of the privileged classes did not require consideration because a man’s word was his bond. A noble’s family seal evidenced that bond. The seal was affixed to the contract by way of pressing the signatorius annulus (signet ring) against melted wax onto the contract. Not everyone was a member of nobility, but all wanted their contracts to be binding. Thus, the concept of looking to bargained-for value in place of the seal evolved into the modern day law of contracts.

Consideration today is made up of two subcomponents: detriment and bargain theory. Detriment represents the value of the contract, that is, the glue that brought the parties to the table in the first place. It is actually a very practical requirement. Without value being put at issue, a court looking at the situation may simply say the matter is moot (nothing in controversy). Detriment is usually divided into two main categories: affirmative detriment, where a person promises to do something he or she has no obligation to do but for the contract; and negative detriment, where a person abstains from doing something he or she has a legal right to do but for the contract. Consideration is usually what is bargained for. It is what is given up by one party to induce a similar action by the other. Value means nothing.

What if you have examined an agreement for consideration and found it lacking? You may still have a contractual result based on either the equitable doctrine of promissory estoppel or on specific statutory grounds that allow for a consideration waiver or substitute. Promissory estoppel literally means that a promise made, even though not supported by consideration, will not be allowed to be withdrawn, because of the harm that would befall the other party. The second major category of consideration exceptions from contracts is found in statutory provisions based on public policy. For example, the U.S. Bankruptcy Code allows for court-approved reaffirmation of debts that have already been discharged. Another example is found in many state statutes that provide protection to charitable organizations making pledges as enforceable contracts even though the donors may not be getting any consideration in return for their gifts.

II. Chapter Objectives

Define consideration and describe the requirements of consideration.
Define gift promise and identify whether gift promises are enforceable.
Describe contracts that lack consideration, such as those involving illegal consideration, an illusory promise, a preexisting duty, or past consideration.
Define accord and satisfaction of a disputed claim.
Define and apply the equitable doctrine of promissory estoppel.

III. Key Question Checklist

What is a consideration?
Are gift promises enforceable?
Is it possible to enforce a contract that lacks consideration?
Under what conditions can the doctrine of promissory estoppels be applied?

IV. Text Materials

Consideration

Consideration is something of value given in exchange for a promise. It may be tangible or intangible. There is a rebuttable presumption that written contracts are supported by consideration.

Requirements of Consideration – Consideration requires that something of legal value be given. This includes situations in which the promise suffers a legal detriment or the promisor receives a legal benefit. The consideration must also be a bargained-for exchange, instead of a gratuitous promise.

Gift Promise

Gratuitous promises are unenforceable because they lack consideration. A completed gift promise cannot be rescinded for lack of consideration.

Critical Legal Thinking – The law does not know how to measure moral obligation and seems to simply punt on the issue rather than address it.

Case 11.1 Gifts and Gift Promises: Cooper v. Smith

800 N.E.2d 372, 2003 Ohio App. Lexis 5446 (2003), Court of Appeals of Ohio

Facts: Lester Cooper was hospitalized as a result of serious injuries. Julie Smith visited him frequently at the hospital and the two became involved in a romantic relationship, culminating in a proposal of marriage from Cooper and Smith accepting. Upon his release from the hospital, Cooper moved in with Smith and her mother, Janet Smith. He bought gifts for Julie, paid off Janet’s car, and made improvements to the house. About six months later, Julie and Cooper had a disagreement and Cooper moved out; Julie returned the engagement ring. Cooper sued to recover the value of all the gifts and improvements. The magistrate who heard the case dismissed Cooper’s case, and the trial court affirmed the dismissal of the case. Cooper appealed.

Issue: Can Cooper recover the gifts or the value of the gifts he gave to Julie and Janet Smith?

Decision: The court of appeals affirmed the judgment of the trial court, allowing Julie and Janet Smith to keep the gifts. The court of appeals held that the gifts made by Cooper to Julie (other than the engagement ring) and to Janet were irrevocable gifts that he could not recover simply because his engagement with Julie ended.

Ethics Questions: Was this just a “con” job to get Cooper’s money? Was there really a relationship? If the first, then the women acted unethically; if the latter, Cooper did. Engagement rings are a promise of a marriage and, as such, have a symbolic meaning. No other gift would have such meaning.

Promises that Lack Consideration

Illegal Consideration – Contracts cannot be supported by a promise to perform or refrain from doing an illegal act. These contracts are void.

Illusory Promises – If one or more parties to a contract can opt not to perform their obligations, the contract lacks consideration, and is considered illusory contracts.

Moral Obligations – Promises made due to moral obligations are generally not enforceable as moral consideration is not a legal consideration.

Preexisting Duty – If the person that promises to perform an act was already under a duty to perform it, the promise lacks consideration.

Past Consideration – Promises for prior actions are not supportable as consideration.

Case 11.2 Lack of Consideration: Noohi v. Toll Brothers, Inc.

708 F.3d 599, 2013 U.S. App. Lexis 4188 (2013), United States Court of Appeals for the Fourth Circuit

Facts: Toll Brothers had a deposit on a house, which it had not yet started to build. The homebuyer could not get a mortgage to move forward with the project. Toll Brothers refused to return the deposit though it had not started any construction. An arbitration clause ran against the homebuyer as to this house contract. The plaintiffs (Mehdi Noohi and Soheyla Bolouri, husband

and wife) sued on their own behalf and on behalf of a similarly situated class.

Issue: Was there consideration for the arbitration agreement?

Decision: Arbitration clause was not enforceable. Class action could proceed.

Business Ethics: These factors certainly did not help Toll Brothers when the court looked at the situation. Both are edgy business practices.

Special Business Contracts

Output Contracts – The seller agrees to sell all of his production to a single buyer, assuring the buyer a steady supply and the seller an easy market.

Requirements Contract – The buyer contracts to purchase all of its requirements from a single source, assuring the buyer a uniform supply and the seller, reduced expenses.

Best-Efforts Contracts – These require that one or both parties use their best efforts to obtain the objective of the contract.

Settlement of Claims

The compromise agreement used to voluntarily settle disputed contracts is called an accord. If the accord is performed, it is called a satisfaction. This type of settlement is called an accord and satisfaction, or a compromise.

Equity: Promissory Estoppel

The doctrine of detrimental reliance protects people from the injustice of the promisor revoking their promise. This doctrine, also called promissory estoppel, requires that a promisor make a promise that they should have reasonably expected the promisee to rely upon. The promisee must have relied upon that promise and would suffer an injustice if the promise was not enforced.

Critical Legal Thinking – I think the standards are not hard to apply. This concept protects parties to perform work especially in unilateral contract situations. This is a concept which keeps the United States operating at a higher moral level than in other parts of the world.

V. Key Terms and Concepts

Accord—An agreement whereby the parties agree to accept something different in satisfaction of the original contract.
Accord and satisfaction—A settlement involving accord is called accord and satisfaction.
Bargained-for exchange—Exchange that parties engage in that leads to an enforceable contract.
Best-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.
Consideration—Something of legal value given in exchange for a promise.
Estop—The doctrine of promissory estoppel estops (prevents) the promisor from revoking his or her promise based on lack of consideration.
Gift promise—A “completed gift promise” becomes a true gift, which by definition is irrevocable.
Illegal consideration—A promise to refrain from doing an illegal act. Such a promise will not support a contract.
Illusory promise—A contract into which parties enter, but one or both of the parties can choose not to perform their contractual obligations. Thus, the contract lacks consideration.
Legal value— To be enforceable, a contract must be supported by consideration, which is broadly defined as something of legal value.
Output contract— A contract in which a seller agrees to sell all of its production to a single buyer.
Past consideration—A prior act or performance. Past consideration (e.g., prior acts) will not support a new contract. New consideration must be given.
Preexisting duty—A promise lacks consideration if a person promises to perform an act or do something he or she is already under an obligation to do.
Promissory estoppel—An equitable doctrine that prevents the withdrawal of an offer by an offeror if it will adversely affect an offeree who has adjusted his position in justifiable reliance on the offer.
Requirements contract—A contract in which a buyer agrees to purchase all of its requirements for an item from one seller.
Satisfaction—The performance of an accord.
Unified Contract Law— In 1999, China dramatically overhauled its contract laws by enacting the Unified Contract Law (UCL).