1. Chapter 8 Consideration
11/14/2018
Chapter 8 Consideration
8-1 Types of Consideration
8-2 Questionable Consideration
8-3 When Consideration Is Not Required
Chapter 8
LAW

2. 8-1 Types of Consideration
GOALS
Identify the three requirements of consideration
Discuss the adequacy of consideration
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3. CONSIDERATION Promise, act, or forbearance Contractual exchange
Legal value
Adequacy of consideration
Nominal consideration
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4. List the three requirements of consideration.
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5. 8-2 Questionable Consideration
GOALS
Describe situations in which consideration is present only under limited circumstances
Recognize when what appears to be binding consideration is not
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6. CIRCUMSTANTIAL CONSIDERATION
Illusory promises
Termination clauses
Output and requirements contracts
Continued on the next slide
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7. CIRCUMSTANTIAL CONSIDERATION
Existing duty
Existing public duty
Existing private duty
Settlement of liquidated debts
Settlement of unliquidated debts
Release
Composition of creditors
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8. Why is consideration not binding in illusory contracts?
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9. FALSE CONSIDERATION
Mutual gifts
Past performance
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10. What distinguishes a gift from a valid contract?
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11. 8-3 When Consideration Is Not Required
GOALS
Distinguish situations in which consideration is not needed
Recognize when the doctrine of promissory estoppel can be applied
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12. EXCEPTIONS TO THE REQUIREMENT OF CONSIDERATION
Promises to charitable organizations
Promises covered by the UCC
Firm offers
Modifications
Promises barred from collection by statute
Statute of limitations
Debts discharged in bankruptcy
Promissory estoppel
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13. Name four exceptions to the requirement of consideration.
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14. PREVENT LEGAL DIFFICULTIES
Remember that under contract law . . .
Generally both parties must give and receive consideration if their agreement is to be enforceable as a contract.
Adequacy of consideration generally is immaterial to whether or not a contractual promise is enforceable.
Accepting money in exchange for giving up a legal right constitutes consideration and is binding. Consult a lawyer before making such an agreement in any major dispute.
Continued on the next slide
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15. PREVENT LEGAL DIFFICULTIES
A pledge to a charitable institution is generally binding without consideration and should not be made unless you intend to fulfill it.
Generally, however, promises to make gifts cannot be enforced by the intended donee.
You should use care and good judgment in making contracts. Courts generally will not rescue you from “bad bargains” or unfavorable deals voluntarily made.
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