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marcus-aurelius

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Contracts Consideration Question
« on: November 08, 2010, 04:58:56 PM »
I'm reading the Aspen E & E on Contracts. 

A consideration is a promise or act that has been given in exchange for the return promise or performance.  The promisee must suffer some form of legal detriment for a consideration.  This legal detriment can be an immediate act, forebearance, or partial/complete abandonment of a right.  IT could also be a promise to act, forbear, or abandon a right.

Here is my question.  I am unsure why the following example is not considered a consideration (no pun intended) but rather a condition of a gift

Al Imnus promises to donate $10,000 to his alma materand specifies that his money be allocated to the college's scholarship program. The college accepts the promise and agrees to use the funds as specified.

The E & E states this is not a consideration because the promise is not a legal detriment.  At the time of the promise, Al has not handed over the money to the college, and the college has no right to Al's money.  Therefore it does not forbear on any legal right that it has on the time of payment.

My supposition is that the school is promising to forbear from using his money in any other manner than for the scholarships.  So is there future promise to give up a right to spend the money as they so choose a detriment?

bigs5068

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Re: Contracts Consideration Question
« Reply #1 on: November 08, 2010, 05:30:57 PM »
I think I remember something like this and I will try to bring my contracts I class back in to my mind. I could be wrong, but as I understand it the scholarship money is nothing more than a gift. They may assert promissory estoppel to get the money, but the donor is not receiving anything from the school other than feeling good about himself for giving scholarships and having some discretionary control over the spending, but it is still a gift.

If something is a gift there is no consideration. A car for money for example is consideration.  The car dealer wants money and the car buyer wants a car.

In the example you gave the school wants money, but the donor is not getting anything from the school. He might feel good about himself, but feeling good does not equal consideration in contract terms. 

I might be wrong this was over a year ago, but as I remember it that is how it goes. 

marcus-aurelius

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Re: Contracts Consideration Question
« Reply #2 on: November 08, 2010, 05:37:03 PM »
that makes sense to me.  But now say that the school promises to take out an ad in a paper thanking him for his donation.  Would that be a consideration and thus cause the promise to use the money as an additional part of the contract?

bigs5068

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Re: Contracts Consideration Question
« Reply #3 on: November 08, 2010, 08:05:08 PM »
Well that gets a little tricker, but I still think that would not be sufficient. It seems the school is just giving the guy a gift for giving him the money. If explicitly in the deal he said I will give you the money on the condition that  you publish a thank you ad, then consideration would probably be there. Money for ad space is clearly consideration.  However, if it was not part of the deal and the school just unilaterally published the ad out of the goodness of their heart it would still just be a gift from the school and gifts do not equal consideration. That is my two cents on it anyways and I might be wrong, but if I remember correctly that is how it should turn out.

Another thing you might try doing is Cali Lessons I got them from my school and every school has them. Maybe Georgetown might give you access to them. They are more interactive than E & E, Emmanuels etc and I found them the most helpful, but again people may differ.   Sounds like you are putting in a lot of work pre-law school good for you. 

hjr999

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Re: Contracts Consideration Question
« Reply #4 on: December 09, 2010, 01:12:53 AM »
I recently read a case this semester that addresses a similar situation.  The poster above is right, it is merely a gift because the donor did not ask for something in return.  I don't have my text with me at the moment, but I believe it was a Cardozo opinion.  The facts involved a woman who donated money to a school with a request to have the the money allocated towards a fund in her name, ie. The Joe Blow Fund for Lazy Students.  When she later tried to retract the offer, the school claimed collateral estoppel.  She made a counter-claim that no consideration had initially been given, so the school could not assert such a claim.  Cardozo and his wildly rampant imagination, held that the request of the fund's name was sufficient consideration via some sort of posthumous legacy.  His opinions make me cringe. 

Thane Messinger

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Re: Contracts Consideration Question
« Reply #5 on: December 09, 2010, 02:38:27 AM »
I'm reading the Aspen E & E on Contracts. 

A consideration is a promise or act that has been given in exchange for the return promise or performance.  The promisee must suffer some form of legal detriment for a consideration.  This legal detriment can be an immediate act, forebearance, or partial/complete abandonment of a right.  IT could also be a promise to act, forbear, or abandon a right.

Here is my question.  I am unsure why the following example is not considered a consideration (no pun intended) but rather a condition of a gift

Al Imnus promises to donate $10,000 to his alma materand specifies that his money be allocated to the college's scholarship program. The college accepts the promise and agrees to use the funds as specified.

The E & E states this is not a consideration because the promise is not a legal detriment.  At the time of the promise, Al has not handed over the money to the college, and the college has no right to Al's money.  Therefore it does not forbear on any legal right that it has on the time of payment.

My supposition is that the school is promising to forbear from using his money in any other manner than for the scholarships.  So is there future promise to give up a right to spend the money as they so choose a detriment?


Depending upon the jurisdiction, in some consideration is not required for a charitable contribution to be binding, while in other jurisdictions a charity's "pledge" to use the funds for charitable purposes can be sufficient consideration.  There are a few cases in the latter jurisdictions that make this messy, however, and if the facts warrant it there's always promissory estoppel (albeit as an equitable remedy this would be only for the value relied upon, which is not necessarily the same as the amount pledged).  Notably, detrimental reliance is fairly easy for a charity to establish: by virtue of their budgets they rely, sometimes desperately, on pledges.  Courts have been fairly lenient, as well, on public policy grounds.  In one case language by the donor that they intended to be legally bound was sufficient.  (Note that it would not be in a non-charitable contract.)

For an exam, the key is to note the points and reason them through.  Unless it's a basic point (in which case you just state it), it's fine to pose the legal test and give the "if x, then y" tests.  Lots of points therein.  The key is to tie those legal tests to the relevant ones being asked, and those to the real legal problem posed: Does D have to pay or not?  If there's no fact relating to reliance, the most you'd put is "No facts support reliance, thus no equitable remedy of promissory estoppel here."  (If reliance applies elsewhere, be sure to separate those out.)

Hope this helps,

Thane.