Business Law: Ch 8. Consideration. Consideration. Consideration – What a person demands and generally must receive in order to make promise legally binding. Consideration. Three Requirement of Consideration
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Existing Private Duty – A person cannot demand further compensation for carrying out a contractual promise already made
Settlement of Liquidated Debts (is where the parties agree that the debt exists and on the amount of the debt)
When a creditor (person to whom the debt is owed) agrees to accept less than the total amount due in full settlement from the debtor (person who owes money) there is no consideration if the debt is liquidated
Assume Frank borrows $1000 from Carrie. The loan is to be paid back in one year with interest at 10% per year, or a total payment of $1,100. Frank sends a check to Carrie on the due date for $1,000 and a note saying “Sorry, I’m strapped for cash. You will have to accept this in full payment.” Carrie endorses and cashes the check.