Considreation
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Considreation in business law

Considreation in business law

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Considreation  Considreation Presentation Transcript

  • Consideration CHAPTER 12
  • Quote of the Day
    • “ Promises are the uniquely human way of ordering the future .”
    • Hannah Arendt,
    • German-American Political Scientist
  • Consideration
    • 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.
  • 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.”
  • 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 AND AND AND B to give A a benefit OR B to suffer a detriment Consideration supports a contract! Bargain A B
  • 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.
  • 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.
  • Preexisting Duty
    • A promise to which the promisor is already obligated is not consideration.
      • Exceptions:
        • If the scope of the promisor’s task increases, that increase is consideration.
        • When unforeseen circumstances cause a party to make a promise regarding an unfinished project, that promise is valid consideration.
        • Modification of a sale of goods is allowable without consideration, unless there is a written agreement forbidding such modifications.
  • 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 --
    • 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.
    Settlement of Debts -- Unliquidated Debt
  • Payment by Check
    • Common Law ruling:
      • If a debtor writes “Paid in Full” 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.
  • “ The law does not hold us accountable for every promise we make. The doctrine of consideration determines which promises a court must enforce.”