1. Questionable Consideration Copyright © Texas Education Agency, 2013. All rights reserved.

2. 2 Copyright and Terms of Service Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee.

3. Illusory Promises Termination Clauses the power to withdraw from a contract if business circumstances change Output and Requirements Contracts Output contract - steel company may buy all of the output of a nearby coal mining company. Requirements contract - carburetor manufacturer may agree to supply all the carburetors needed for the production of a certain make of vehicle. 3Copyright © Texas Education Agency, 2013. All rights reserved.

4. Existing Duty Existing Public Duty If you make an agreement not to drink alcohol when you are not of age to drink, there is no binding agreement  Existing Private Duty When a duty already exists, a person cannot come back demanding more 4Copyright © Texas Education Agency, 2013. All rights reserved.

5. Settlement of Liquidated Debts Individuals must pay the amount agreed upon. 5Copyright © Texas Education Agency, 2013. All rights reserved.

6. Settlement of Unliquidated Debts Genuine dispute between the parties about how much is owed Accord and satisfaction - a payment offered in full settlement by the debtor and accepted by a creditor settles the claim 6 Copyright © Texas Education Agency, 2013. All rights reserved.

7. Release When a tort occurs - the liability is un- liquidated because the extent of damages is uncertain Due to financial pressure - injured party in the tort will agree to discharge another person from liability for the tort in return for a monetary payment or other consideration (release) 7 Copyright © Texas Education Agency, 2013. All rights reserved.

8. Composition of Creditors Group of creditors will cooperatively agree to accept less than what they are entitled to, in full satisfaction of their claims against a debtor Debtor agrees not to file for bankruptcy 8 Copyright © Texas Education Agency, 2013. All rights reserved.

9. False Consideration Mutual Gifts - when something of value is given by one party to another without demanding anything in return, the something of value is not consideration for anything later promised or provided. Past Performance - an act that has already been performed cannot serve as consideration 9Copyright © Texas Education Agency, 2013. All rights reserved.

10. Assignments Independent Practice Assignments 1.When Credit Gets Out of Personal Control PowerPoint Assignment: Credit card debt has gotten out of control in America. Research “Credit Card Debt” on the Internet and prepare a PowerPoint presentation that describes the current credit situation in the U.S, advantages and disadvantages of credit, bankruptcy, and composition with creditors. The presentation must demonstrate knowledge of binding contracts related to credit cards, bankruptcy, and settlement of debt through composition of creditors. This assignment will be evaluated using the associated rubric. 2.Circumstantial Consideration Poster Assignment: Divide a poster into two equal parts. Label the two parts: Illusory Promise and Existing Duty. Provide pictures and text to describe each of these concepts on the poster. Your poster should give students a clearer understanding of both concepts. This assignment will be evaluated using the associated rubric. 3.Case Study: Alex owed Keith $5,000 which was due in one year. There was no dispute about the amount. Keith needed the money after two months, so Alex offered to pay $4,000 early in full settlement of the debt. If Alex pays the $4,000 early, will Keith be able to successfully sue and collect the $1,000 later? 10 Copyright © Texas Education Agency, 2013. All rights reserved.