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Consideration by dfhdhdhdhjr

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									Consideration
   Chapter 8
Consideration – what a
 person demands and
 generally must receive
 in order to make a
 contract legally
 binding
3 Requirements of Consideration

1. Each party must give an
  act, forbearance, or
  promise to the other party

Forbearance – refraining
  from doing something you
  have the right to do
3 Requirements of Consideration

2. Each party must trade
   what they contribute to the
   transaction

3. What each party trades
   must have legal value
 ** Consideration
  distinguishes a
contractual promise
from a promise to
    give a gift **
Gift – transfer of ownership
 without receiving anything in
 return
  generally not legally enforceable

Donor – gives
Donee – receives
  After gift exchange occurs,
   transaction becomes binding
Nominal Consideration –
 token amount identified in a
 written contract when parties
 either cannot or do not wish
 to state the amount
 specifically
 Ex. $1 and other valuable
 consideration in exchange for a car
Questionable
Consideration
   Illusory Promises
 A contract clause that
 allows you to escape legal
 obligation

Ex. I promise to paint your
 house…if I have time.
   Termination Clauses
 Gives power to withdraw from
 a contract if certain
 circumstances change, or after
 the passage of a certain length
 of time
  Exceptions must be defined
Output and Requirement Contracts

 Output Contract – A buyer’s
  agreement to purchase all of a
  particular producer’s
  production
 Requirements Contract – A
  seller’s agreement to supply all
  of the needs of a buyer
      Existing Duty
A promise to do something that
 you are already obligated to do
 by law or prior contract does
 not serve as consideration

This is called…
  Existing Public/Private Duty
     Liquidated Debt
Where an agreement is made
 that a debt and the true
 amount of that debt exists and
 must be repaid

 All debt must be recovered
  Unliquidated Debts
Where an agreement cannot
 be reached as to the
 amount of debt owed
 Accord and Satisfaction
 - a compromise must be
   made
Once an agreement is
 reached concerning
 unliquidated debt, this
 is called a release
Composition of Creditors
When a group of creditors
 cooperatively agree to
 accept less than what they
 are entitled to in exchange
 for the debtor not filing
 bankruptcy
   Past Performance
 An act that has already been
 performed cannot serve as
 consideration for an
 immediate or future contract
 This is known as past
  consideration
   When is
Consideration
not Required?
1.Promises to Charitable
 Organizations
2.Promises covered by
 the UCC
   Firm Offers
   Modifications
3. Promises barred from Collection
 by Statute
Statute of Limitations
  A specific time limit for bringing a
   lawsuit
Debts Discharged in Bankruptcy
  Some debt lost in bankruptcy can
   still be reinstated by a promise of
   the debtor
4. Promissory Estoppel
  Prevents a promisor from
  stating in court that they
  did not receive
  consideration for their
  promises
Requirements for P.E.
1.Must forsee reliability
 on the promise
2.Promisee does act in
 reliance of the promise
3. Promisee would suffer
  economic loss
4. Injustice can be
  avoided only by
  enforcement of the
  promise

								
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