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Business Law Chapter 12


undefined, object
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Inducement to make a promise enforcement
Gratuitous Promise
Promise made without consideration
Legal Sufficiency
Benefit to the promisor or detriment to the promisee
Legal Detriment
Either doing an act that one is not legally obligated to do or refraining from doing an act that one has a legal right to do
Legal Benefit
Obtaining something to which one had no legal right
Adequacy of Consideration
Not required where parties have freely agreed to the exchange
Person making a promise
Person receiving a promise
Illusory Promise
Promise imposing no obligation on the promisor
Output Contract
Agreement to sell all of one's product
Exclusive Dealing
Sole right to sell goods in a defined market
Conditional Promise
Obligations contingent upon a stated event
Preexisting Public Obligations
Performance of public duties such as those imposed by tort or criminal law is neither a legal detriment nor a legal benefit
Preexisting Contractual Duty
Performance of a preexisting contractual duty is not consideration
Modification of a Preexisting Contract
Under the common law, a modification of a preexisting contract must be supported by mutual consideration; under the Code a contract can be modified without new consideration
Substituted Contract
Parties rescind their original contract and enter into a new one
Undisputed Debt
Obligation whose existence and amount are not contested
Settlement of an Undisputed Debt
Payment of a lesser sum of money to discharge an undisputed debt does not constitute legally sufficient consideration
Disputed Debt
Obligation whose existence or amount is contested
Settlement of Disputed Debt
Payment of a lesser sum of money to discharge a disputed debt is legally sufficient consideration
Bargained-for Exchange
Mutually agreed upon exchange
Past Consideration
Unbargained-for past events
Statute of Limitations
Time period within which a lawsuit must be initiated
Promise to Pay Debt Barred by Statute of Limitations
A new promise by the debtor to pay the debt renews the running of the statute of limitations for secondary statutory period
Promises to Pay Debt Discharged in Bankruptcy
May be enforceable without consideration
Voidable Promises
A new promise to perform a voidable obligation that has not been previously avoided is enforceable
Moral Obligation
A promisee made to satisfy a preexisting moral obligation is generally unenforceable for lack of consideration
Promissory Estoppel
Doctrine that prohibits a party from denying his promise when the promisee takes action or forbearance to his detriment reasonably based upon the promise
Contracts Under Seal
Where still recognized the seal acts as a substitute for consideration

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