2. A Bargain and an Exchange Consideration means that there must be bargaining that leads to an exchange between the parties. Consideration can be anything that someone might want to bargain for. A promisor is the person who makes the promise, and promisee, the person to whom the promise is made.

3. A Bargain and an Exchange The thing bargained for can be: – another promise or action. – a benefit to the promisor or a detriment to the promisee. – a promise to do something or a promise to refrain from doing something. “Bargaining is obligating yourself in order to induce the other side to agree.”

4. Bargain AB There is consideration to support a contract between A and B, when they bargain... and their bargaining causes BOTH parties... …to either give a benefit to the other or to suffer a detriment themselves. Which causes... A to give B a benefit OR A to suffer a detriment AND B to give A a benefit OR B to suffer a detriment Consideration supports a contract!

5. Adequacy of Consideration Courts seldom inquire into the adequacy of consideration. A previously paid benefit is generally not consideration because it was not meant to induce the other side to agree. – Exception: Economic Benefit -- in some cases, courts will enforce consideration that is an economic benefit, given with the expectation of later payment.

6. Mutuality of Obligations Illusory Promise – If one party’s promise is conditional, the other party is not bound to the agreement. Sales Law: Requirements and Output Contracts – See Ch. 11 for definitions of these contracts. – Section 2-306 of the UCC expressly allows output and requirements contracts in the sale of goods.

7. Preexisting Duty A promise to do something the promisor is already obligated to do is not consideration. – Exception: Additional work. When a promisor agrees to do something above and beyond what he is obligated to do, the promise is generally valid consideration. – Exception: Modification. If both parties agree to a modification, the best solution is to rescind the contract and draft a new one.

8. Liquidated Debt A liquidated debt is one in which there is no dispute about the amount owed. – In cases of liquidated debt, if the creditor agrees to take less than the full amount as full payment, her agreement is not binding. – If the debtor offers a different performance to settle the debt and the creditor agrees, the agreement is binding. Settlement of Debts --

9. A debt is unliquidated if: – (1) the parties dispute whether any money is owed, or – (2) the parties agree that some money is owed but dispute how much. The parties may agree to settle for less than what is owed; this “accord and satisfaction” will be enforced if the debtor pays the agreed amount. Unliquidated Debt

10. Accord & Satisfaction by Check Common Law ruling: – If a debtor writes “Full Settlement” on a check, and the creditor cashes it, the payment is in full whether or not it was the right amount. UCC §3-311 – Affirms the Common Law ruling, but adds two exceptions: Organizations may notify debtors that any offers to settle debt for less than the whole amount must be directed to a certain person. The creditor can refund the paid amount within 90 days and then demand the full amount.