Chapter 15 Notes
Chapter 15 Notes ACCT 324 - 002
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This 2 page Class Notes was uploaded by Kendall Davis on Thursday September 1, 2016. The Class Notes belongs to ACCT 324 - 002 at University of South Carolina taught by Julius David Johnson (P) in Fall 2016. Since its upload, it has received 5 views. For similar materials see Survey of Commercial Law in Accounting at University of South Carolina.
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Date Created: 09/01/16
Chapter 15 August 31, 2016 Consideration: something of value, given in exchange for something else of value, that is the product of a mutually bargainedfor exchange o Ex. time and expertise of a tax expert for a person’s money o What a person is going to receive for performing their obligation o Examples of consideration: Benefit to promisee Detriment to promisor i.e. refrain from doing something they have a legal right to do Promise to do something Promise to refrain from doing something Rules of Consideration o For a promise to be enforced legally, there must be consideration Is it just a gift? o ExceptionPromissory Estoppel One party makes promise knowing other party will rely on it Other party relies on promise (‘actual reliance”) Justice dictates enforcement of promise, even though it is not supported by consideration o Court rarely considers adequacy of consideration Not concerned with quality, just whether it exists Ex. Nephew said he would not smoke and drink until a certain age, even thought he had the right to do so legally; detriment to promisor o Illusory promise does not constitute consideration Ex. someone says they will go look at a car, but does not say they will buy it; and they don’t o Past consideration does not constitute consideration for purposes of present contract Ex. giving someone stock for the past 5 years of hard work in a company; if he doesn’t then there is no consideration Blackman vs. Iverson; Blackman gave him the nickname before he promised to pay (considered past consideration) o Promise to do something you are already legally obligated to do is not valid consideration (“preexisting duty rule”) Wanted poster, rewards Police officer finding criminal on wanted poster, does not get reward Partial Payment of Debt: o Liquidated Debt: No dispute as to amount of money owed o Unliquidated Debt: Parties either (in good faith) dispute fact money owed, or dispute amount of money owed Ex. signing someone else’s check at a restaurant o “Accord and Satisfaction” Requirements (“accord” represents agreement, “satisfaction” represents payment; accord and satisfaction means partial payment of disputed debt discharges remaining balance allegedly owed: Unliquidated debt Creditor agrees to accept, as full payment, less than creditor claims owed Debtor pays agreed upon amount Chapter 16 Contractual Capacity: someone’s mental ability to understand rights and obligations established by contract, with the presumptive ability o General rule of law: natural persons over the age of maturity
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