Business Law I Instructor: Peter Durovic Note-Chapter 6 James Jung Definition Bargain: each party pays a price for

or the promise of the other Consideration: the price for which the promise of the other is bought Gratuitous promise: a promise made without bargaining for or accepting anything in return Past consideration: a gratuitous benefit previously conferred upon a promisor Moral cause: moral duty of promisor to perform his promise
Estopped: prevented Promissory estopped or equitable estoppel: the courts exercise of its equitable jurisdiction to estop a promisor from claiming that she was not bound by her gratuitous promise where reliance on that promise caused injury to the promise Injurious reliance: loss or harm suffered by a promise who, to his detriment, relied reasonably on a gratuitous promise Quantum meruit: the amount a person deserves to be paid for goods or services provided to the person requesting them. Covenant: a serious promise Covenator: one who makes a covenant Document under seal: a covenant recorded in a document containing a wax seal, showing that the covenantor adopted the document as his act and deed Deed: a document under seal, which today is usually a small, red, gummed wafer

Short Answer Equitable estoppel applies in situations when - Some form of legal relationship already exists between the parties; - One of the parties promises (perhaps by implication only) to release the other from some or all of he others legal duties to him - The other party, in reliance on that promise, alters his conduct in a way that would make it a real hardship if the promisor reneges on his promise

Important Point - The court will not assess whether the value is fair (unless there was duress: chapter 9) - The promisors honest belief in the value of the consideration that they give is sufficient to make the promise enforceable - The legal requirement is that the promisor gives something which they value, and not that the promisee receive a benefit which they value A promise made without accepting anything in return Does not form a binding contract There is no legal remedy for broken promise (but see equitable estoppel, below)

Case & Problem #2 Issue: Can Barney use the defense of Equitable Estoppel? Relevant Law: -Gratuitous Promise: Promise made without Bargain for our accepting anything in return not enforceable generally. -equitable estoppel can be used for a defense when 1. legal relationship exists b/w parties ** 2. one of the parties promises to release the other from legal ** duties 3. in reliance of that the other party alters conduct. Analysis: Ruth offered a gratuitous promise to reduce Barneys debt. 1. Landlord tenant legal relationship 2. \ruth offered a gratuitous promise 3. Barney takes out a book loan and doesnt declare bakrupcy. & continues rent. Barney is now left with more debt than if he declared bankruptcy in the first place. #3 Issue: a) Is the town entitled to keep 4 million? b) Does Borkus have to pay the remaining amount he promised? Is this a gratuitous promise? Does Borkus gratuitous promise enforceable? Did the town rely on Borkus promise. Relevant Law: a). gratuitous promise -Not enforceable a) Transfer of ownership c). Reliance DEF. DETAIL DETAIL

Analysis: a). Barkus has already given 4 million to town -cant ask for it back -ownership was transferred b). Barkus doesnt have to pay remaining amount. -no contract (gratuitous promise, no seal) RELIANCE?