Business Law I Chapter 9 Answers

Chapter 9 Answers: 1. Consideration consists of mutual exchange of gains and losses between contracting parties. In the exchange, a gain by the offer is at the same time a loss to the offeror. The legal term used to designate the gain that each party experiences is that party 's legal benefit. Consideration has three characteristics 1) The agreement must involve a bargained-for exchange; 2)the contract must involve adequate consideration; and 3) the benefits and detriments promised must themselves be legal. 2. A legal detriment can be any of the following: 1) doing something that one has a legal right not to do; 2) giving up something that one has a legal right to keep; and 3) regaining from doing something that one has a legal right to do. 3. The law will not enforce an agreement that has not been bargained for. An agreement involves a bargained-for exchange when 1) a promise is made in exchange for another promise, 2) a promise is made in exchange for an act, or 3) a promise is made for forbearance of an act. 4. A court may refuse to enforce a contract or any clause of a contract if is considers the contract or clause unconscionable, that is, the consideration is so ridiculously inadequate that it shocks the court 's conscience. This designation usually happens when there is a great inequality in bargaining power between the two parties. 5. Consideration can be a promise not to sue. A promise not to sue, when there is right, or at least the apparent right, to sue, is enforceable when it is supported by consideration. Promising not to sue is forbearance. Acceptance of an agreement not to sue, supported by consideration, terminates one’s right to continue any lawsuit, presently or on the future, on grounds described in the agreement. 6. There are three ways that the courts can seek to uphold charitable pledges. The first way involves actual consideration, which occurs when charitable contributions are made on the condition that the promisor