Term
| True or false: Promissory estoppel cannot make a promise to modify a contract legally binding if there is no consideration for the promise under the preexisting-duty rule. |
|
Definition
| False. Promissory estoppel does not require consideration so the preexisting-duty rule is not a bar to the promise being legally binding. |
|
|
Term
| What is the rule regarding promissory estoppel and a promise to modify a contract? |
|
Definition
| A promise to modify a contract duty not fully performed on either side is binding without consideration to the extent that justice requires enforcement in view of a material change of position in reliance on the promise. |
|
|
Term
| True of false: When applying promissory estoppel to a promise to modify a contract, the promisee must prove that the promisee's reliance was foreseeable to the promisor. |
|
Definition
| False. Foreseeable reliance is presumed. |
|
|
Term
| True or false: For promissory estoppel to make a promise to modify a contract legally binding, the promisee's reliance need not be material. |
|
Definition
| False. The promise must result in a material change of position in reliance on the promise. |
|
|
Term
| True or false: A promise to modify a contract governed by the U.C.C. is enforceable without consideration. |
|
Definition
| True, though the modification must be sought in good faith. |
|
|
Term
| For a promise to modify a contract to be legally binding under the U.C.C. without consideration, what is required? |
|
Definition
| The promisee must have acted in good faith in obtaining the promise. |
|
|
Term
| What is an example of a bad-faith modification of a contract? |
|
Definition
| The promisee's extortion of a modification without legitimate commercial reason, such as the hold-up game (i.e., extorting a modification simply to obtain more money, even though there have been no change in circumstances). |
|
|
Term
| What is a typical example of a good-faith modification of a contract? |
|
Definition
| A modification when circumstances make performance more expensive than anticipated. |
|
|
Term
| "Good faith," with respect to seeking and obtaining a promise to modify a contract, means what? |
|
Definition
| (1) The person was in fact motivated by a legitimate commercial reason (such as increased costs of performance), and (2) such a reason would cause an ordinary person to seek a modification of the contract. |
|
|
Term
| True or false: Consideration is not necessary for a contract modification to be binding under the U.C.C., but only if the modification is in a writing signed by the promisor. |
|
Definition
| False. There is no writing requirement for this rule, though many such modifications might need to be in writing for other reasons (for example, the contract requires them to be in writing or the contract is within the Statute of Frauds, topics not covered this semester and which you should ignore for now). |
|
|
Term
| True or false: For a contract modification to be legally binding under the U.C.C. without consideration, at least one of the parties has to be a merchant. |
|
Definition
| False, though whether the parties are merchants might affect whether the modification was sought in good faith. |
|
|
Term
| Which of the following recognizes the unanticipated-circumstances doctrine: The traditonal rule or the modern rule? |
|
Definition
| The modern rule. The traditional rule rejects the unanticipated-circumstances doctrine. |
|
|
Term
| When the unanticipated-circumstances doctrine applies, does that mean there is consideration for the agreement to modify? |
|
Definition
| No. The doctrine is a consideration substitute. |
|
|
Term
| What are the requirements of the unanticipated-circumstances doctrine? |
|
Definition
| A promise to modify a contract is binding despite a lack of consideration if: (1) The promise modifying the original contract was made before the contract was fully performed on either side; (2) the underlying circumstances which prompted the modification were unanticipated by the parties; and (3) the modification was fair and equitable. |
|
|
Term
| As a general rule, an agreement to settle a legal dispute requires what to be legally binding? |
|
Definition
| Consideration or a recognized consideration substitute. |
|
|
Term
| Under the modern rule, a promise to not assert, or the release (waiver) of, an invalid claim does not have legal value unless what? |
|
Definition
| The claim is either doubtful or the subject of an honest dispute. |
|
|
Term
| Under the traditional rule, a promise to not assert, or the release (waiver) of, an invalid claim does not have legal value unless what? |
|
Definition
| The claim is both doubtful and the subject of an honest dispute. |
|
|
Term
| With respect to the settlement of an invalid legal claim, whether the claim is doubtful or the subject of an honest dispute is based on how things appears at what point in time? |
|
Definition
| When the parties entered into the bargain, and it is not affected by a subsequent determination or realization of the claim's invalidity (remember Fiege v. Boehm?--"That's not my baby!"). |
|
|
Term
| What is the distinction between a release and a contract not to sue? |
|
Definition
| A release is the act of giving up a right or claim to the person against whom it could have been enforced. (The word "release" has traditionally been used to refer to a written waiver of a claim.) A contract not to sue (or covenant not to sue) is a contract under which a party promises not to sue. |
|
|
Term
| What is the U.C.C. rule regarding a renunciation? |
|
Definition
| A written renunciation of a claim for breach of contract that is signed and delivered by the renouncing party to the other party after the breach is legally binding without consideration. The rule has not been followed under the common law. |
|
|
Term
|
Definition
| An agreement between a creditor and a debtor under which the creditor promises to accept from the debtor a performance different from that currently owed, and the debtor promises to provide the different performance or actually provides the different performance without a promise, with the understanding that the debtor's original contract duty will not be discharged unless and until performance (the "satisfaction" of the accord). |
|
|
Term
| True or false: When there is an accord, the debtor's original contract duty is suspended until either the debtor breaches the accord or there is satisfaction. |
|
Definition
|
|
Term
| True or false: If the debtor materially breaches its promise in an accord, the creditor can enforce either the debtor's original contract duty or the debtor's alternative duty under the accord. |
|
Definition
|
|
Term
| A debtor's original contract duty is discharged under an accord at what point in time? |
|
Definition
|
|
Term
| A creditor who offers a unilateral contract to a debtor, under which the creditor offers to accept a different performance that that owed by the debtor, has the privilege to revoke the offer up until what point? |
|
Definition
| The debtor accepting by performance, unless an option exists (for example, the debtor starts performing and an equitable option arises). |
|
|
Term
| What is a substituted contract? |
|
Definition
| A contract under which the parties take on new and different duties, and manifest an intention to immediately discharge the old duties. |
|
|
Term
| True or false: If a party breaches a substituted contract, the injured party has the option of suing to enforce the breaching party's original duties or the new duties. |
|
Definition
| False. Unlike the breach of an accord, the injured party only has the privilege to sue for the breach of the substituted contract. |
|
|
Term
| How does a court determine if an agreement is an accord or a substituted agreement? |
|
Definition
| It applies the objective theory of contract (i.e., what a reasonable person would believe). |
|
|
Term
|
Definition
| A substituted contract where a new party is added. |
|
|
Term
| True or false: A novation immediately discharges the parties' duties under the prior contract. |
|
Definition
| True, because a novation is a type of substituted contract. |
|
|
Term
| What is an agreement of rescission? |
|
Definition
| A contract under which each party to a prior contract agrees to discharge the other's remaining contract duties without taking on any new and different duties. |
|
|
Term
| True or false: An agreement of rescission immediately discharges the parties' duties under the prior contract. |
|
Definition
|
|
Term
| True or false: To determine whether an accord, a substituted contract, a novation, or an agreement of rescission is legally binding, courts apply the rules applicable to the enforceability of contracts in general (i.e., consideration or a bargain substitute is necessary, and the preexisting-duty rule applies to determine if consideration exists). |
|
Definition
|
|
Term
| True or false: When the amount of money a debtor owes the creditor is in dispute, the debtor's promise to pay (or the payment of) an amount the debtor concedes is owed is consideration for the creditor's return promise to accept the amount in settlement of the dispute. |
|
Definition
| True with respect to a majority of the courts. False with respect to a minority of the courts. The majority rule is an exception to the preexisting-duty rule. |
|
|
