Questionable
Consideration
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Illusory Promises
Termination
Clauses
the power to
withdraw from
a contract if
business
circumstances
change
Output and Requirements
Contracts
Output contract - steel
company may buy all of the
output of a nearby coal
mining company.
Requirements contract carburetor manufacturer
may agree to supply all the
carburetors needed for the
production of a certain make
of vehicle.
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3
Existing Duty
 Existing Private Duty
When a duty already exists, a person
cannot come back demanding more
• Existing Public Duty
If you make an agreement not to
drink alcohol when you are not of
age to drink, there is no binding
agreement
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4
Settlement of Liquidated Debts
• Individuals must pay the amount agreed
upon.
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Settlement of Unliquidated
Debts


Genuine dispute
between the parties
about how much is
owed
Accord and
satisfaction - a
payment offered in
full settlement by
the debtor and
accepted by a
creditor settles the
claim
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Release
• When a tort occurs - the liability is unliquidated because the extent of damages
is uncertain
• Due to financial pressure - injured party in
the tort will agree to discharge another
person from liability for the tort in return
for a monetary payment or other
consideration (release)
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Composition of Creditors
• Group of creditors will
cooperatively agree to
accept less than what
they are entitled to, in
full satisfaction of their
claims against a debtor
• Debtor agrees not to
file for bankruptcy
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False Consideration
• Mutual Gifts - when something of value is given by
one party to another without demanding anything in
return, the something of value is not consideration
for anything later promised or provided.
• Past Performance - an act that has already been
performed cannot serve as consideration
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Assignments
Independent Practice Assignments
1. When Credit Gets Out of Personal Control PowerPoint Assignment: Credit card
debt has gotten out of control in America. Research “Credit Card Debt” on the
Internet and prepare a PowerPoint presentation that describes the current credit
situation in the U.S, advantages and disadvantages of credit, bankruptcy, and
composition with creditors. The presentation must demonstrate knowledge of
binding contracts related to credit cards, bankruptcy, and settlement of debt through
composition of creditors. This assignment will be evaluated using the associated
rubric.
2. Circumstantial Consideration Poster Assignment: Divide a poster into two equal
parts. Label the two parts: Illusory Promise and Existing Duty. Provide pictures and
text to describe each of these concepts on the poster. Your poster should give
students a clearer understanding of both concepts. This assignment will be evaluated
using the associated rubric.
3. Case Study: Alex owed Keith $5,000 which was due in one year. There was no
dispute about the amount. Keith needed the money after two months, so Alex
offered to pay $4,000 early in full settlement of the debt. If Alex pays the $4,000
early, will Keith be able to successfully sue and collect the $1,000 later?
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