|
First Principles of Business Law |
| Making a contract |
| 3. The second essential element of formation: Formal execution or exchange of consideration |
| 3.12. A compromise as consideration |
|
Read the facts and the question and then choose the best answer. A, a lawyer, says to B: "You owe me $10,000. If you don't pay I'll sue you." B replies: "I dispute your claim. I think I only owe you $5,000. But I'll pay you $6,000 if you promise not to sue me for the rest." A replies: OK, if you pay me $6,000 I won't sue for the rest." Has B given A sufficient consideration to make A's promise legally enforceable?
|
|
(a) No. B is offering to pay less than A is claiming. This is not sufficient consideration for A's promise not to sue B. (b) Yes. Even though B is offering to pay less than A is claiming, this is sufficient consideration for A's promise not to sue B. |
|
|
|