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COMM 393 Class 5 Notes

Payment/Consideration The courts interpret the time set for payment as a warranty unless the parties have expressed themselves otherwise. Consideration o In order for there to be a contract, there must be consideration = an exchange. o Consideration is not restricted to the payment of money. o Consideration must have material value. Love and affection are not sufficient consideration there must be market value. o Adequacy of consideration is not an issue for the courts, unless there is: Fraud, undue influence, duress Gratuitous Promises o = Promises made without consideration o A promise made without bargaining o Donations Only binding if: Made under seal, OR Where charity has done something in response to the donation Gratuitous Reduction of a Debt o Section 40, Law & Equity Act, in B.C. Creditor who accepts a lesser sum in full satisfaction of a debt will not be permitted to later claim balance due if lesser sum has already been paid Equitable estoppel may prevail o Get around rule in Foakes and Beer case by: Payment before due date Give another form of consideration Rule only applies to money Doesnt apply to third party paying lesser sum if creditor cancels remaining debt o Gratuitous Benefit Previously Conferred Upon a Promisor A promise to reward another who has previously done an act gratuitously or given something of value is not binding There is no element of bargain, not benefit being performed in return for a promise o Existing Legal Duty A new bargain requires new consideration = a promise to pay extra for what is already owed under an existing contract is not binding

There must be either new consideration or promise under seal to be binding If existing legal duty is owed to a third party, a promise to do the same thing for someone else is enforceable Equitable Estoppel or Promissory Estoppel o The courts exercise of its equitable jurisdiction to estop a promisor from claiming that she was not bound by a gratuitous promise where reliance on the promise caused injury to the promise o Rule: When a person make a gratuitous promise & another relies on that promise in good faith to his detriment, the maker of the promise will be estopped (prevented) from later denying that he made the promise o Equity will enforce the gratuitous promise if the following is present: There must be a pre-existing legal relationship between the parties (contract must sill exist) One of the parties releases the other from obligations, even by implication The existing contract is modified/varied by a gratuitous promise The person relying on the gratuitous promise must suffer some detriment if promise not lived up to Quantum Meruit o Where goods or service are requested in a business context & no price is set, there is an obligation to pay a reasonable price o Pay what is reasonably worth, or quantum meruit Use of A Seal o A seal is an alternative way to make a promise binding o The seal must be present at the time of signing o Party signing must be aware of the seal & its significance