8
CHAPTER
Consideration
8-1 Types of Consideration
8-2 Questionable Consideration
8-3 When Consideration Is Not
Required
Law for Business and Personal Use
© Thomson South-Western
8-1 Types of Consideration
GOALS
 Identify the three requirements of
consideration
 Recognize the various forms of
consideration
Chapter 8
Slide 2
Law for Business and Personal Use
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FOCUS
 List five promises you have recently
made.
 Beside each promise list what you
received in return.
 Review the list and place a check by
the promise(s) that you believe would
be legally binding on you if the
promisee pursued the issue in court.
Chapter 8
Slide 3
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CONSIDERATION
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Act, forbearance, or promise
Trading
Legal value
Adequacy of consideration
Nominal consideration
Chapter 8
Slide 4
Law for Business and Personal Use
© Thomson South-Western
List the three requirements of
consideration.
Chapter 8
Slide 5
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8-2 Questionable Consideration
GOALS
 Describe situations in which
consideration is present only under
limited circumstances
 Recognize when what appears to be
binding consideration is not
Chapter 8
Slide 6
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© Thomson South-Western
FOCUS
Scenario
 Ms. Miller tells her students: “You have
worked hard, and if you continue to perform
at this high level, I'll pay for a pizza party at
the end of the year—if I think it is warranted.”
The students continue to work hard, and
class grades are high, but no party is given.
Question
 Can the students enforce the promise?
Chapter 8
Slide 7
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CIRCUMSTANTIAL
CONSIDERATION
 Illusory promises
 Termination clauses
 Output and requirements contracts
Chapter 8
Slide 8
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(continued)
CIRCUMSTANTIAL
CONSIDERATION
 Existing duty
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Chapter 8
Slide 9
Existing public duty
Existing private duty
Settlement of liquidated debts
Settlement of unliquidated debts
Release
Composition of creditors
Law for Business and Personal Use
© Thomson South-Western
Why is consideration not binding
in illusory contracts?
Chapter 8
Slide 10
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FALSE CONSIDERATION
 Mutual gifts
 Past performance
Chapter 8
Slide 11
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What distinguishes a gift from a
valid contract?
Chapter 8
Slide 12
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8-3 When Consideration
Is Not Required
GOALS
 Distinguish situations in which
consideration is not needed
 Recognize when the doctrine of
promissory estoppel can be applied
Chapter 8
Slide 13
Law for Business and Personal Use
© Thomson South-Western
FOCUS
 Why are exceptions to the doctrine of
consideration needed?
Chapter 8
Slide 14
Law for Business and Personal Use
© Thomson South-Western
EXCEPTIONS TO THE REQUIREMENT
OF CONSIDERATION
 Promises to charitable organizations
 Promises covered by the UCC
 Firm offers
 Modifications
 Promises barred from collection by statute
 Statute of limitations
 Debts discharged in bankruptcy
 Promissory estoppel
Chapter 8
Slide 15
Law for Business and Personal Use
© Thomson South-Western
Name four exceptions to the
requirement of consideration.
Chapter 8
Slide 16
Law for Business and Personal Use
© Thomson South-Western