[Aquafairy]

Dave owes debts of $3,000 to Al, $2,000 to Bob, and $1,000 to Chad. Dave offers to settle the claims by paying $1,500 to Al, $1,000 to Bob, and $500 to Chad. If Al, Bob, and Chad agree to accept Dave’s offer:

A.
the agreement would be enforceable because it is an assignment for the benefit of the creditors.

B.
the agreement would be enforceable since there is sufficient consideration for the promises of the creditors to forgive the balance of their claims.

C.
the agreement would be unenforceable since there is no consideration for the promises of the creditors to forgive the balance of their claims.

D.
the agreement would be unenforceable if Dave owed a debt to any other creditors.

The answer is C.

I thought that the creditor all agreeing to accept less than the full amount would be the consideration needed to make it enforceable .. what am I overlooking?

[Aquafairy]

This is the same question as above but now they say that it is enforceable because agreement of the creditors is considered consideration….

I have read this word for word, what am I missing that differentiates one from the other ??

Dave owes debts of $3,000 to Al, $2,000 to Bob, and $1,000 to Chad. Dave offers to settle the claims by paying $1,500 to Al, $1,000 to Bob, and $500 to Chad. If Al, Bob, and Chad agree to accept Dave's offer:

A.
the agreement would be enforceable because it is an assignment for the benefit of the creditors.

B.
the agreement would be enforceable since there is sufficient consideration for the promises of the creditors to forgive the balance of their claims.

C.
the agreement would be unenforceable since there is no consideration for the promises of the creditors to forgive the balance of their claims.

D.
the agreement would be unenforceable if Dave owed a debt to any other creditors.

Answer IS B

A composition agreement is an agreement between the debtor and his creditors in which the debtor makes a proportional part payment of his claims and the debtor is discharged from the balance due. The debtor is released from liability only on claims of creditors who voluntarily agree to the compensation. The existence of other creditors who are not parties to the composition agreement does not affect the enforceability of the agreement.

The consideration for the promise of one creditor in a composition agreement to forgive the balance of his claim is found in the promises of the other creditors to forgive the balance of their claims.

Finally, an assignment for the benefit of creditors involves the transfer of the debtor's property to a trustee.

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