Contracts and Sales Multistate Bar Practice Exam

What must be true for forbearance to sue to constitute valid consideration?

1. The claim must be valid and in good faith

2. The claim must be brought by a third party

3. The forbearance must be unconditional

4. The intent to sue must be explicitly stated

The correct answer is: The claim must be valid and in good faith

Forbearance to sue can serve as valid consideration in a contract if certain conditions are met. When a party agrees to refrain from pursuing a legal claim, that promise can be considered consideration, provided the claim they are forgoing has a reasonable basis. In this instance, the requirement that the claim must be valid and in good faith underscores the necessity for the party relinquishing their right to sue to have a legitimate, enforceable claim. If the claim is not valid, or if the intent behind the forbearance is questionable (e.g., simply to avoid litigation without any real substance), then the consideration may fail to meet the necessary legal expectations. Recognizing the importance of legitimate grounds ensures that the forbearance is not merely a hollow gesture but represents a true compromise in a contractual agreement. This avoids situations where one party might exploit an unmeritorious claim simply to obtain consideration in a contract or agreement. Thus, the existence of a valid and good faith claim is essential for the forbearance to hold legal weight and be recognized as valid consideration.