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Contracts - Consideration
Contracts - Consideration
Contracts - Consideration
Contracts — Consideration
Introduction
Consideration is legal value given in
return for a promise or performance.
Must have something of legal value or
sufficiency.
Must be a bargained-for exchange.
§1: Legal Sufficiency of
Consideration
Consideration for a promise must be
either:
Legally detrimental to the promisee,
or
Legally beneficial to the promisor.
§2: Adequacy of Consideration
A Court will not question the fairness of
the bargain if legally sufficient.
Law does not protect a person for entering into
an unwise contract.
In extreme cases, a court may find that a party
lacks legal capacity or that contract was
unconscionable.
§3: Contracts That Lack
Consideration
Preexisting Duty.
Promise to to what one already has a legal duty to do does
not constitute legally sufficient consideration.
Exceptions:
• Unforeseen Difficulties.
• Recession and New Contract.
FACTS: (cont’d)
Powell later claimed that O’Halloran offered, in return,
that MVE would pay Powell $125.456 per share for his
MVE stock.
Powell did as O’Halloran asked until April, when
O’Halloran asked him to stop. MVE refused to pay
Powell $125.456 per share for his stock.
Powell sued MVE for breach of contract. The court
ruled in Powell’s favor for $3.5 million in stock. MVE
appealed.
Case 11.2: Powell v. MVE
(Adequacy of Consideration)