Lesson+6-Questionable+Consideration

Lesson 6-Questionable Consideration

Important Terms for this Lesson • requirements contract - a contract in which a seller agrees to supply all of the needs of a particular buyer • liquidated debt - a debt which both parties agree exists and both parties agree on the amount of the debt • accord and satisfaction - parties’ agreement can’t change the obligation required by their original contract and the performance of the new obligation • release - settling a claim at the time the tort occurs, while the liability is unliquidated because the extent of damages is uncertain • composition of creditors - a settlement in which the creditors mutually agree to accept less than they are entitled to in full satisfaction of their claims while the debtor agrees not to file for bankruptcy •illusory promise - a promise that courts will not enforce ||
 * • output contract - a contract in which a buyer agrees to purchase all of a particular producer’s production

Lesson Summary:
 * **Q:** Why is consideration not binding in illusory contracts?
 * A:** The promise is not binding because it is in essence a sham paraphrased by "I will if I want to."
 * Q:** What distinguishes a gift from a valid contract?
 * A:** Only a completed gift (shown by intent, delivery, and acceptance of the subject matter) is legally enforceable. A stated intent to make a gift, standing alone, is not enforceable. A valid contract, however, is enforceable because consideration supports the contractual promise.
 * Q:** What is an output contract?
 * A:** An output contract exists when a buyer agrees to purchase all of a particular producer’s production.
 * Q:** What is liquidated debt?
 * A:** Liquidated debt is a debt which both parties agree exists and both parties agree on the amount of the debt. ||