Please use IRAC methods (Issue, Rule( has been provided already), Analysis, and Conclusion).

1. Past Consideration. Jovi Le attended a family reunion in which her rich aunt, Lieu, was in attendance. She took a liking to Jovi, whom she had not seen in 10 years. After a long conversation with Jovi, aunt Lieu learned that Jovi almost dropped out of college due to her bad habits of partying, drinking, and gambling. But Jovi decided to change her life around without any interference from her family and friends. She completely gave up her wild and reckless lifestyle. After hearing this, aunt Lieu made a serious pronouncement, "In consideration of all the bad habits that you gave up, I will give you $10,000." Jovi was very pleased and accepted the offer. Six months later, Jovi contacted aunt Lieu to remind her of their agreement. Aunt Lieu told Jovi that she had deposited the money in a bank account named "Jovi" to earn net interest. Aunt Lieu assured her that she would withdraw the money for Jovi whenever she wanted it. Five years later, aunt Lieu died, Jovi went to the bank to access her funds. The bank she said she was not a co-owner of the account and gave her no access. She asked aunt Lieu's estate for the money plus interest, citing the verbal agreement with her aunt; the estate refused. Discuss whether Jovi can enforce the agreement between her and Aunt Lieu.

Rule ( Promises made in return for actions or events that have already taken place are unenforceable. These promises lack consideration in that the element of bargained-for exchange is missing. In short, you can bargain for something to take place now or in the future but not for something that has already taken place. Therefore, past consideration is no consideration.)

2. Adequacy of Consideration. In 1974, David Wickham signed a written agreement with his son, Mark Wickham. David agreed that during his lifetime he would not transfer any interest in his 765 shares of stock of Posner Manufacturing Co. unless he first gave Mark an opportunity to purchase it, and on David's death, Mark would have the "option and right to purchase all of the stock" from the estate. The agreement stated that it was entered into "In consideration of $10.00 and other good and valuable consideration, including the inducement of Second Party [Mark] to remain the chief executive officer of said company." David died in 1980. Mark gave notice that he intended to buy the stock, but one of the beneficiaries under David's will objected, contending that there was no consideration for David's promises. Mark sued to force the estate to transfer the shares. Discuss whether this contract is supported by consideration.

Rule ( Adequacy of consideration involves "how much" consideration is given. Essentially, adequacy of consideration concerns the fairness of the bargain.) On the surface, when the items exchanged are of unequal value, fairness would appear to be an issue. Normally, however, a court will not question the adequacy of consideration based solely on the comparative value of the things exchanged. In other words, the determination of whether consideration exists does not depend on the values of the things exchanged. Something need not be of direct economic or financial value to be considered legally sufficient consideration. In many situations, the exchange of promises and potential benefits is deemed to be sufficient consideration. Under the doctrine of freedom of contract, courts leave it up to the parties to decide what something is worth, and parties are usually free to bargain as they wish. If people could sue merely because they had entered into an unwise contract, the courts would be overloaded with frivolous suits.

3. Promissory Estoppel. Ava Tikk recently got laid off from her accounting firm in Provo, Utah. With the help of a head hunter, she was interviewed for a senior accounting position at Milmer Till & Swass, a prestigious accounting firm in Salt Lake City. She was also interviewed by small accounting firm in her home town of Park City, where her parents and siblings lived. She was immediately offered the accounting position in Park City and was given a week to make her decision. In the meantime, she called the hiring manager at Milmer Till & Swass to inform him that she had been offered another position but she preferred to work for their firm in Salt Lake City. After a lengthy phone conversation, the hiring manager offered her the position with a start date to be determined later. She accepted and immediately called the Park City firm to decline their job offer. After a week of hearing nothing from Milmer Till & Swass, she called to ask about her start date. She was transferred to one of the partners of the firm, who told her that they changed their mind and did not want to hire her. She stated that she gave up another job offer because of the hiring manager's offer to hire her, which she accepted. The partners apologized for the inconvenience and hung up the phone. Ava sued Milmer Till & Swass for breach of contract. Milmer Till & Swass argued there was no contract because there was no consideration. Could Ava enforce Milmer Till & Swass's promise to hire her?

Rule ( Promissory Estoppel: Sometimes, individuals rely on promises, and their reliance may form a basis for a court to infer contract rights and duties. Under the doctrine of promissory estoppel (also called detrimental reliance), a person who has reasonably and substantially relied on the promise of another can obtain some measure of recovery. Promissory estoppel allows a party to recover on a promise even though it was made without consideration. Under this doctrine, a court may enforce an otherwise unenforceable promise to avoid an injustice that would otherwise result.)

For the doctrine of promissory estoppel to be applied, the following elements are required:

1. There must be a clear and definite promise.

2. The promisor should have expected that the promisee would rely on the promise.

3. The promisee reasonably relied on the promise by acting or refraining from some act.

4. The promisee's reliance was definite and resulted in substantial detriment.

5. Enforcement of the promise is necessary to avoid injustice.

If these requirements are met, a promise may be enforced even though it is not supported by consideration. In essence, the promisor (the offeror) will be estopped (barred or prevented) from asserting lack of consideration as a defense.

Promissory estoppel is similar in some ways to the doctrine of quasi contract that was discussed in a previous chapter. In both situations, a court acts in the interests of equity and imposes contract obligations on the parties to prevent unfairness even though no actual contract exists. The difference is that with quasi contract, no promise was made at all. In contrast, with promissory estoppel, an otherwise unenforceable promise was made and relied on.

4. Mental Incompetence. Charles Fraser was diagnosed with Alzheimer's disease in 1982. On January 11, 1986, during a hospital stay for surgery Fraser conveyed his farm to his sons, Jacob and Dillion. Jacob was deeded a larger share of the property than Dillion. Dillion asked a court to set the deeds aside, alleging that his father was not mentally competent when the deeds were signed. Medical evidence introduced at trial conflicted. A physician, a psychiatrist, and an attorney all testified that when they had seen Charles at various times during 1985 and early 1986, Charles had been unable to handle his financial affairs or understand the legal consequences of his actions. Another psychiatrist, however, testified that Charles "had lucid intervals." The attorney who obtained Charles's signatures on the deeds stated that Charles understood what he was signing and was aware that he was deeding more of the property to Jacob than to Dillion. The nursing summaries indicated that on the day that the deeds were signed, Charles was having lucid periods. How should the court rule? Explain fully.

Rule (Contractual capacity is the legal ability to enter into a contractual relationship. Courts generally presume the existence of contractual capacity, but in some situations, capacity is lacking or may be questionable. A person who has been determined by a court to be mentally incompetent, for instance, cannot form a legally binding contract. In other situations, a party may have the capacity to enter into a valid contract but may also have the right to avoid liability under it. For instance, minorsor infants, as they are commonly referred to in the lawusually are not legally bound by contracts.

In this section, we look at the effect of youth, intoxication, and mental incompetence on contractual capacity.)

5. Adhesion Contracts. Nancy Holland suffered a heart attack and was hospitalized at Dallas Central Hospital. At the time of her admission, the Hollands told the hospital that they did not have the money to pay for medical care. At the same time, Nancy's husband, Dell, signed an agreement to pay her medical expenses. He did not read what he signed, no one explained the agreement to him, and he later claimed to have been so upset that he could not remember having signed anything. When the bills were not paid, the hospital filed a suit in a Texas state court against the Hollands. The court ruled in favor of the hospital, and the Hollands appealed. They argued that the agreement was an adhesion contract obtained under circumstances that made it unenforceable. Were the circumstances such that the agreement may have been unenforceable?

Rule (Procedural unconscionability can also occur when there is such a disparity in bargaining power between the two parties that the weaker party's consent is not voluntary. This type of situation often involves an adhesion contract, which is a standard-form contract written exclusively by one party (the dominant party) and presented to the other (the adhering party) on a take-it-or-leave-it basis. In other words, the adhering party (usually a buyer or borrower) has no opportunity to negotiate the terms of the contract. Not all adhesion contracts are unconscionableonly those that unreasonably favor the drafter.)