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First Principles of Business Law |
| Making a contract |
| 3. The second essential element of formation: Formal execution or exchange of consideration |
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3.3. Informal agreements |
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Read the facts and the question and then choose the best answer. A says to his friend B: "I promise to give you $1,000 each month for the next twelve months. If I don't pay you can sue me." B replies to A: "That's very nice of you. I accept!" Is A's informal promise sufficient to be legally enforced by B?
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(a) Yes, because A has specifically said that B can sue him if he doesn't pay as promised. (b) No, because informal promises only become legally enforceable if each party gives something to the other at the time the agreement is made, which has not happened here. |
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