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Mutual Consideration

Mutual Consideration. 9-1 What is Consideration? 9-2 Legal Value and Bargained-For Exchange 9-3 When is Consideration Not Required?. What is a Consideration?. Consideration- 3 Requirements -Each party must give an act, forbearance, or promise to the other party.

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Mutual Consideration

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  1. Mutual Consideration 9-1 What is Consideration? 9-2 Legal Value and Bargained-For Exchange 9-3 When is Consideration Not Required?

  2. What is a Consideration? Consideration- 3 Requirements -Each party must give an act, forbearance, or promise to the other party. - Each party must trade what they contribute to the transaction(act, forbearance, or promise) for the other party's contribution. What each party trades must have legal value.

  3. Legal Value and Bargained-For Exchange Legal Value means there is a change in the legal position of the party as a result of the contract. To be consideration, a promise must be binding(must create a duty or impose an obligation). - If a contract contains a clause that allows you to escape the legal obligation, it is said to be illusory Existing Duty- A person promises to do something they are already obligated by law to do. This cannot serve as a consideration.

  4. When Is Consideration Not Required? Promissory Estoppel -Promisor should reasonably forsee that the promisee will rely on promise. -Promisee does, in fact, act in reliance on the promise. -Promisee would suffer substantial economic loss if the promise is not enforced. -Injustice can be avoided only by enforcement of the promise. Statute of limitations specifies the time limit for bringing a lawsuit. Uniform Commercial Code

  5. Vocabulary Gift- transfer of ownership without receiving anything in return Forbearance- promise to not do something Promisor- person promising action or forbearance Promisee- person whom promise is made to Legal Value- change in a party's legal position as a result of contract Nominal Consideration- amount of consideration that the parties cannot state or don't want public Output contract- agreement to purchase all of a particular producer's production Requirements contract- seller agrees to supply all of the needs of a particular buyer Liquidated debt- debt for which the parties agree that the debt exists and on the amount of the debt Accord and satisfaction- parties' agreement to change the obligation required by original contract Release- party settles a claim at the time the tort occurs, and liability is unliquidated because extent of damages is uncertain Composition of creditors- agreement by all creditors to accept a smaller amount as full payment Promissory estoppel- promise is enforced even though no consideration is given for it

  6. Vocabulary Continued Statute of Limitations- state laws setting time limit for bringing a law suit Option contract- underlying contract to keep an option open Firm offer- binding offer stating in writing how long it is to be held open

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