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Consideration

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › Consideration

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • August 16, 2016 at 3:56 pm #333611
    firelion28
    Member
    • Topics: 159
    • Replies: 83
    • ☆☆☆

    Hi Sir,

    there are three instances where past consideration is suficient

    1. Bill of exchange
    2. Right to sue for a recovery of debt
    3. When a request is madde for a service

    Sir, I cannot understand this and what do we mean by bill of exchange. And in what ways are these past consideration

    August 16, 2016 at 4:06 pm #333620
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    A bill of exchange! These used to be in the English syllabus and they still are in the global syllabus

    By definition:

    A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to, or to the order of, a specified person or to bearer

    It’s basically an instruction (to the bank, more often than not) to pay a creditor

    Say you buy goods (or services) and you don’t pay straight away … instead you give the supplier a piece of paper that satisfies the definition of a bill of exchange

    The bill will have a period of time specified – Pay 90 days after date …

    After 90 days, that bill has matured and is due for payment. But your bank refuses to pay it – maybe not enough funds in your account

    So the creditor sues you

    You claim that the bill is not enforceable because the goods that you received were delivered 90 days ago and past consideration is no consideration

    Won’t work, sorry. Bills of exchange are an exception to that rule

    That actually explains the first 2 from your list

    I’d like the full context for the third one on your list – does the text not give you a bit of explanation?

    August 16, 2016 at 5:48 pm #333659
    firelion28
    Member
    • Topics: 159
    • Replies: 83
    • ☆☆☆

    Thank you so much for the wonderful explanatin. THe third one is as follows-

    When a request is made for a service this request may imply a promise to pay for it. If after that the service has been rendered the person who made the request promises a specific reqard.

    August 16, 2016 at 8:43 pm #333677
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    Hmm, ok. Because there is an implied promise to pay, the subsequent promise of a reward is merely taken as confirmation of the amount of the earlier implied promise

    NB in practice it is always safer to agree on ALL major terms before starting to discharge your end of the agreement!

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