CONSIDERATION 2

CONSIDERATION 2 - CONSIDERATION AND PREEXISTING LEGAL...

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CONSIDERATION AND PREEXISTING LEGAL OBLIGATIONS
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Problem D owes C $5,000 C promises to take $4,000 in full satisfaction of D’s obligation to pay $5,000 D gives C $4,000 Does C now have the right to collect an additional $1,000? Or does D’s payment of $4,000 discharge his obligation to pay $5,000? If so, there has been an accord and satisfaction
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Accord and Satisfaction Accord - Agreement to accept a different performance in satisfaction of an existing obligation Satisfaction - Performance of that agreement Accord and satisfaction bars C from collecting anything more Answer depends on whether there is consideration for C’s promise to accept $4,000 in satisfaction of $5,000 obligation. Which in turn depends on whether obligation was liquidated or unliquidated
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Liquidated Debt (or obligation) No dispute or uncertainty as to existence or amount of debt Exs. 1. D agrees to buy big screen TV from C for $5,000, payable in 30 days. TV delivered, works fine. 30 days pass 2. D borrows $5,000 from C, signs note, payable in 6 months. 6 months pass.
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Unliquidated Debt (or obligation) Uncertainty or dispute as to either existence or amount or both Exs. 3. D orders from C 1,000 pounds USDA choice steaks at $5/pound. Steaks are delivered; some are lower grade, some are rotten 4. C and D have an accident C claims it is D’s fault and will have damages of at least $5,000
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Where debt is liquidated, is there consideration for a creditor’s promise to take less in full satisfaction? Is payment of less legal benefit
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This note was uploaded on 12/13/2010 for the course LAW 1101 taught by Professor Reed during the Spring '08 term at CUNY Baruch.

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CONSIDERATION 2 - CONSIDERATION AND PREEXISTING LEGAL...

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