Chapter12 - Consideration Offer + Acceptance = Agreement...

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Consideration Offer + Acceptance = Agreement Offer + Acceptance + Consideration = CONTRACT Generally, consideration is the value given in return for a promise. The consideration, which must be present to make the contract legally binding , must be something of legally sufficient value and bargained for and must result in a detriment to the promisee or a benefit to the promisor. This concept is often referred to as "bargained-for legal detriment." What is "bargained-for legal detriment," you ask? Often, consideration is broken down into two parts: 1. Something of legal value must be given in exchange for the promise, and 2. There must be a bargained-for exchange. The "something of legal value" may consist of a return promise that is bargained for. If it
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consists of performance, that performance may be: 1. an act (other than a promise); 2. a forbearance (refraining from action); or 3. the creation, modification, or destruction of a legal relation. (change in legal position) For example, Giles says to Pope, "When you finish painting the garage, I will pay you $200." Pope paints the garage. The act of painting the garage is the consideration that creates Giles' contractual obligation to pay Pope $200. (unilateral contract, by the way) Suppose, however, that Giles says to Pope, "In consideration of the fact that you are much smarter than the rest of the students, I will pay you $500." This promise is not enforceable, because Pope has not given any consideration for the $500 promised. Giles has
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This note was uploaded on 03/31/2008 for the course FIN 3055 taught by Professor Cgiles during the Spring '08 term at Virginia Tech.

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Chapter12 - Consideration Offer + Acceptance = Agreement...

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