Law for Business and Personal Use © Thomson South-Western CHAPTER 8 Consideration 8-1Types of Consideration 8-2Questionable Consideration 8-3When Consideration Is Not Required

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide Types of Consideration GOALS Identify the three requirements of consideration Recognize the various forms of consideration

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 3 FOCUS List five promises you have recently made. Beside each promise list what you received in return. Review the list and place a check by the promise(s) that you believe would be legally binding on you if the promisee pursued the issue in court.

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 4 CONSIDERATION Act, forbearance, or promise Trading Legal value Adequacy of consideration Nominal consideration

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 5 List the three requirements of consideration.

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide Questionable Consideration GOALS Describe situations in which consideration is present only under limited circumstances Recognize when what appears to be binding consideration is not

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 7 FOCUS Scenario Ms. Miller tells her students: “You have worked hard, and if you continue to perform at this high level, I'll pay for a pizza party at the end of the year—if I think it is warranted.” The students continue to work hard, and class grades are high, but no party is given. Question Can the students enforce the promise?

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 8 CIRCUMSTANTIAL CONSIDERATION Illusory promises Termination clauses Output and requirements contracts

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 9 CIRCUMSTANTIAL CONSIDERATION Existing duty Existing public duty Existing private duty Settlement of liquidated debts Settlement of unliquidated debts Release Composition of creditors (continued)

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 10 Why is consideration not binding in illusory contracts?

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 11 FALSE CONSIDERATION Mutual gifts Past performance

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 12 What distinguishes a gift from a valid contract?

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide When Consideration Is Not Required GOALS Distinguish situations in which consideration is not needed Recognize when the doctrine of promissory estoppel can be applied

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 14 FOCUS Why are exceptions to the doctrine of consideration needed?

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 15 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

Law for Business and Personal Use © Thomson South-Western Chapter 8 Slide 16 Name four exceptions to the requirement of consideration.