1. Ch. 8 Consideration

2.  Consideration- What a person demands and generally must receive in order to make his or her promise legally binding.

3. 3 Requirements of consideration  Each party must make a promise, perform an act, or forbear (refrain from doing something).  Each party’s promise, act, or forbearance must be in exchange for a return promise, act or forbearance from the other party.  What each party exchanges must have legal value.

4.  Gift- Transfer of ownership without receiving anything in return. A promise to make a gift is not legally binding. A promise to make a gift is not legally binding.  Donor- Person giving gift  Donee- Person receiving gift

5.  What the parties give and get as consideration need NOT be of equal economic value. People place different value on different things. People place different value on different things.

6.  Nominal Consideration- “One dollar and other good and valuable consideration.”

7.  Illusory Promises- A contract that contains a clause that allows you to escape the legal obligation. “I’ll paint the house if I have time.” “I’ll paint the house if I have time.” Termination clauses- If a contract has a clause that allows a party to terminate the contract for any reason. Termination clauses- If a contract has a clause that allows a party to terminate the contract for any reason.

8.  Existing duty- A person cannot make a promise to do or not do something if they are already obligated to do so by law. Existing public duty Existing public duty

9.  Liquidated debt- When the parties agree that the debt exists and on the amount of the debt. One party MUST pay the full amount of the debt One party MUST pay the full amount of the debt

10.  Accord and Satisfaction- When there is a genuine dispute between the parties about how much is owed, the debt is unliquidated. The agreement of the new debt is the accord. The agreement of the new debt is the accord. The satisfaction is the act of paying the new amount. The satisfaction is the act of paying the new amount.

11.  When a tort occurs, the liability is unliquidated.  Most of the time, the injured party will agree to discharge the liability for the tort in return for money. This is called release.

12.  Composition with creditors- The promise of a creditor to accept less than the amount owed for a promise from the debtor to not file for bankruptcy.