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Question 1

If a creditor agrees to less than the payment required plus the debtor promises not to file bankruptcy, is that enforceable?

Answer 1

Yes, because the debtor has forgone his legal right to file bankruptcy, which is consideration

Question 2

If a creditor gives a written release for a debt, what does that do?

Answer 2

Releases the obligation

Question 3

What is an executory contract?

Answer 3

One involving ongoing periodic payments

Question 4

If a debtor gives a check in full payment that is less than agreed, what are the different viewpoints on this?

Answer 4

• CL: cashing the check is an accord/satisfaction that discharges the entire debt if there was a good faith dispute about the amount and the creditor had reasonable notice that it was full payment.
• UCC: if cashed, entire claim is discharged if the check was tendered in good faith with an accompanying conspicuous statement that it was in full satisfaction, and the amount is unliquidated or subject to a bonafide dispute

Question 5

What are exceptions to cashing a check that claims to be full payment but isn’t?

Answer 5

It doesn’t discharge the debt if:

• creditor is an ORGANIZATION
• before check was tendered, creditor sent a statement that payment must be sent to specific place/person and it wasn’t sent there
• if creditor DOESN’T KNOW check is tendered in full satisfaction
• creditor sends check back within 90 days of payment

Question 6

Agreeing to pay more for the same performance is usually not enforceable because why?

Answer 6

No consideration

Question 7

What are the exceptions to agreeing to pay more for the same performance not being consideration?

Answer 7

• promise is similar but different
• the pre-existing duty was owed to someone other then the person that the new promise is made to
• unanticipated circumstances

Question 8

If there is an agreement to build a house for $200,000 with pine doors, then it is modified to pay $230,000 with red wood doors, is that OK?

Answer 8

Yes, because the promise is similar but different, so there is consideration (diff doors) for more money

Question 9

What is the best way to avoid illusory promises?

Answer 9

Insert a requirement of good faith or reasonableness into the agreement

Question 10

What is an aleatory promise?

Answer 10

Conditional on the happening of a fortuitous event not within the promisor’s control

Question 11

If you make a conditional promise to buy a house contingent on getting approval for a loan, what have you impliedly promised?

Answer 11

To use reasonable efforts to get the loan

Question 12

If you promise to pay an old debt, what does that do to the statute of limitations?

Answer 12

Starts it anew

Question 13

What kinds of contracts are voidable?

Answer 13

Those involving duress, mistake, fraud, infancy

Question 14

If the interpretation of an expression involved in making a contract is at issue, what kind of interpretation should be given?

Answer 14

Objective - what a reasonable person in that person’s shoes, knowing all the addressee knows, would have interpreted it to mean

Question 15

What is the peerless rule?

Answer 15

If an expression could have two equally reasonable meanings, and each person understands it differently, but equally reasonably, no contract is formed

Question 16

What is the case that the peerless rule comes from?

Answer 16

Two ships peerless leaving at different times

Question 17

If a contract was interpreted the same subjective way by both parties, but that wasn’t the meaning that was intended, what happens?

Answer 17

The meaning the parties thought will govern, even if it wasn’t reasonable

Question 18

If one party knows that another party has a different interpretation of the contract, what happens?

Answer 18

The meaning of the other party prevails, even if the first party’s was more reasonable

Question 19

What is consideration?

Answer 19

The thing you’re promising (money, an act, forbearance)

Question 20

What are three ways that a promise could fail on the consideration component?

Answer 20

• bargain was just NOMINAL
• promise was ILLUSORY
• promisor was legally OBLIGATED to do the promise anyway

Question 21

What are the three tests of consideration?

Answer 21

• must induce a CURRENT EXCHANGE of performance
• must cause legal DETRIMENT to the promisor
• must have a BINDING obligation associated with it

Question 22

What is legal detriment?

Answer 22

Refraining from doing something you have a right to do, or doing something you don’t have a legal duty to do

Question 23

Can one consideration support more than one promise?

Answer 23

Yes