Presentation on theme: "Mutual Consideration ● 9-1 What is Consideration? ● 9-2 Legal Value and Bargained-For Exchange ● 9-3 When is Consideration Not Required?"— Presentation transcript:
Mutual Consideration ● 9-1 What is Consideration? ● 9-2 Legal Value and Bargained-For Exchange ● 9-3 When is Consideration Not Required?
What is a Consideration? ● Consideration- 3 Requirements ● -Each party must give an act, forbearance, or promise to the other party. ● - Each party must trade what they contribute to the transaction(act, forbearance, or promise) for the other party's contribution. ● What each party trades must have legal value.
Legal Value and Bargained-For Exchange Legal Value means there is a change in the legal position of the party as a result of the contract. To be consideration, a promise must be binding(must create a duty or impose an obligation). - If a contract contains a clause that allows you to escape the legal obligation, it is said to be illusory Existing Duty- A person promises to do something they are already obligated by law to do. This cannot serve as a consideration.
When Is Consideration Not Required? ● Promissory Estoppel ● -Promisor should reasonably forsee that the promisee will rely on promise. ● -Promisee does, in fact, act in reliance on the promise. ● -Promisee would suffer substantial economic loss if the promise is not enforced. ● -Injustice can be avoided only by enforcement of the promise. ● Statute of limitations specifies the time limit for bringing a lawsuit. ● Uniform Commercial Code
Vocabulary Gift- transfer of ownership without receiving anything in return Forbearance- promise to not do something Promisor- person promising action or forbearance Promisee- person whom promise is made to Legal Value- change in a party's legal position as a result of contract Nominal Consideration- amount of consideration that the parties cannot state or don't want public Output contract- agreement to purchase all of a particular producer's production Requirements contract- seller agrees to supply all of the needs of a particular buyer Liquidated debt- debt for which the parties agree that the debt exists and on the amount of the debt Accord and satisfaction- parties' agreement to change the obligation required by original contract Release- party settles a claim at the time the tort occurs, and liability is unliquidated because extent of damages is uncertain Composition of creditors- agreement by all creditors to accept a smaller amount as full payment Promissory estoppel- promise is enforced even though no consideration is given for it
Vocabulary Continued Statute of Limitations- state laws setting time limit for bringing a law suit Option contract- underlying contract to keep an option open Firm offer- binding offer stating in writing how long it is to be held open