R2d §74. Settlement of Claims?

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R2d §74. Settlement of Claims?

Postby integralx2 » Sun Sep 16, 2012 9:56 pm

I am soooo confused on this. Can someone provide an example ? My teacher didn't explain this well

1) Forbearance to assert or the surrender of a claim or defense which proves to
be invalid is not consideration unless
(a) the claim or defense is in fact doubtful because of uncertainty as to the
facts or the law, or

(b) the forbearing or surrendering party believes that the claim or defense
may be fairly determined to be valid.

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Re: R2d §74. Settlement of Claims?

Postby Gorki » Sun Sep 16, 2012 9:59 pm

Look it up on WestlawNext or Lexis. There are Illustrations in the Comments that will help you out. I just looked and § 74 def has both comments and illustrations.

Tip: Always Westlaw the Comments for Ks restatements. At least my Ks casebook intentionally redacted the comments that made the rule most easily understandable, and put in some damn 10 page case where the court divulges the same info as the official comments, albeit slowly.

EDIT: This is also the Corbin/Williston Doubtful v. Unfounded split right? Yeah, I did not do amazing in Ks at all, so I hope someone else can help you out with this.

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Re: R2d §74. Settlement of Claims?

Postby Bronte » Mon Sep 17, 2012 1:19 pm

It's a tricky provision. It addresses the situation where two parties agree to settle a lawsuit that later turns out to have been a worthless claim. Can a party then refuse to perform on the grounds that the lawsuit was worthless and thus not valid consideration? Section 74 of the Restatement says that the release of a claim is only consideration if, at the time the settlement agreement was executed, there was either objective uncertainty as to the viability of the claim (i.e., a reasonable person would be unsure whether the claim was a winner) or subjective uncertainty as to the viability of the claim (i.e., the party releasing the claim was actually unsure whether the claim was a winner).

The basic rule is that release of a claim that no one, including the plaintiff, thought was a winner is not consideration.

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