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(Accord & Satisfaction, Adequacy of Consideration, Promises Binding…
Accord & Satisfaction
Accord: An agreement to accept performance that is different than what is described in written contract. ---> Disputes Over Monetary Claims - Additional consideration is required for accepting a lower amount than contracted for.
Exceptions: Discharge is not effective, if claimant is an organization, until the instrument is delivered to person designated by organization or if claimant returns payment within 90 days
Use of Negotiable Instrument: If a claim is disputed, it can be discharged if: (1) the one who the claim is against writes a check and writes a statement indicating satisfaction, (2) the claimant obtains payment
Satisfaction: This is performance of that accord. Performance must be complete before satisfaction occurs. Breach causes both the original contract and accord to be actionable.
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General Consideration
Versus Gift: Unenforceable because they do not have a bargained-for exchange. Ex. Giving someone a grand for turning 21 is a gift, but if you give it to them to get them to quit smoking this is enforceable
Bargained-for Exchange: (1) Majority = consideration exists if there is a detriment to a promisee {no regard to benefit received by promisor}, (2) Minority = consideration exists if there is either a benefit or a detriment, (3) 2nd Restatement = must be bargained-for exchange
Legal Detriment: This is a bargained-for exchange for the promise. This can be made manifest in: (1) a returned promise to do something, (2) or to not do something that is legally permitted, (3) actual performance of an act, (4) refraining from doing an act not legally permitted
Modifications
UCC: Only Good Faith is required - fair dealing in accordance to reasonable commercial standards - Installment Contracts: Generally, parties are free to waive terms that benefit without new consideration - In installment contracts, waivers can be retracted if another party is provided reasonable notice of required strict performance
Common Law: Requires Consideration - this is enforceable even if: (1) one party is doing more under the new contract than they are under the ripped-up one, (2) one party agrees to pay for fair and equitable modification in light of the difficulty, (3) there are new obligations on both sides
Settlement of Legal Claims - A promise to not assert a legal claim or release one from a claim or defense to a claim (that proves to be invalid) is not consideration. HOWEVER, if it is arguable, it is can be consideration
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Requirement and Output Contracts - These are contracts where everything of the promisor's must be given to the promisee. Ex. you agree to sell the entire amount of a product manufactured by your plant - Common Law = Consideration required & UCC = only Good-Faith required
Voidable Promises - These are promises voidable by operation of law (infancy or mental incapacitation).
Illusory Promises - These are vague promises that the promisor can choose whether or not to honor. Not legally binding.
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