Answer the questions.
1. Consideration is broken down into two parts: 1. something of legally sufficient value must be given in exchange for a promise; and 2. usually, there must be a bargained-for exchange (page 243.)
a. What is legal value consist of (list all three options)
b. What does bargained for exchange mean?
2.a. What is adequacy of consideration?
b. Do the courts in contract actions automatically determine whether consideration is adequate? Discuss your answer.
3. Fully explain the definition of an illusory promise?
4-5. Read Reviewing: Consideration on page 260 (at the end of the chapter) and answer the four questions that follow. Remember to explain the law.
According to the laws governing a consideration, a legally sufficient value entails a promise that one has no legal authority to execute. A lawfully acceptable value is also anchored on the performance of a task/actions that one is not necessarily obligated to undertake according to the rule of law. In the legal context, consideration is centered on the concept or theory of bargained-for exchange. This means that both parties have agreed to render or take something of equally significant value. It constitutes a contract legally binding both parties to an understanding. For example, suppose your neighbor loves your wall clock. In that case, you can facilitate a bargained exchange whereby both parties make a promise or performance to exchange the wall clock for the bicycle or something of equally significant value as the watch. Notably, without a bargained-for exchange, there is no viable contract governing both parties.
Adequacy of consideration refers to the offeree’s ability to quote a fair price of equal measure or highly proportional value measure as the offeror. The monetary sums may come in the form of an act, a promise to perform or not to perform an action, property, and money (Oliver, 1935, p. 135).
In a court of law, consideration is recognizable in two distinct phases: adequate and sufficient consideration. Adequate consideration requires that a contract is of fair value or reasonably proportional value. In contrast, sufficient consideration considers the value of an element of the contract, irrespective of whether it is fair or not. In this regard, the law allows for the enforcement of an agreement even though the value is not equitable. Therefore the consideration is sufficient but not adequate.
The law provides that an illusory promise involves an uncertainty expressed in a contract that does not legally bind a promisor to fulfill his/her promise or performance.
Oliver, B., 1935. Bills and Notes: Adequacy of Consideration. Marquette Law Review, pp. 135-136.