Chapter 11 Mutual Consideration

What is Consideration? Promisor - the person who gives the promise or action in exchange for the promise or action of another. Promisee -the person to whom the promise or action is given in exchange for the other persons promise or action Consideration -what on gives and receives in a contract Forbearance -refraining from doing what one has a right to do.

Why is Consideration Required? Gift -the voluntary transfer of ownership of property without receiving consideration in return. Seal -an impression on a document, a paper, or wax affixed to the document, or the word Seal or the letters L.S.on the document indication that the parties intend to be legally bound.

What is Sufficient Consideration? Nominal Consideration -a token amount (consideration) identified in a written contract when parties wither cannot or do not wish to state the amount precisely

Is an Existing Obligation Consideration? Compromise if a disputed claim -mutual promises to refrain from bringing suit. Composition of creditors -agreement of all creditors to accept a proportion of their claims as full payment.

Is past Performance Consideration? Past Consideration -value given before a contract is made.

What are exceptions to the requirement of mutual consideration? Promises of Financial Support to Charitable Organizations. Promissory Estoppel –Promissory Estoppel -when a promise is enforced even though no consideration is given for it. Commercial Paper State Statutory exceptions