Asked by jordan lewis on Jul 27, 2024
Verified
David,a debtor,owes debts to creditors Paul,Mark,and Gary.Paul,Mark,and Gary agree with each other and with David to release him from his debts,in exchange for his promise to pay Paul,Mark,and Gary 75 percent of the amount he owes each of them.This is called a composition agreement,and such agreements generally are binding contracts.
Composition Agreement
An arrangement where creditors agree to accept less than the full amount owed to them as full satisfaction of their claims.
Debtor
A person or entity that owes money to another party, usually as a result of borrowing.
Creditors
Creditors are individuals, businesses, or institutions to whom money is owed by debtors for goods, services, or loans provided.
- Pinpoint circumstances that are exclusions to the consideration prerequisite.
Verified Answer
SV
Shivam VaishJul 31, 2024
Final Answer :
True
Explanation :
David,Paul,Mark,and Gary are part of a composition agreement,in which a debtor and two or more creditors agree to accept as full payment a stated percentage of their liquidated claims against a debtor at or after the date on which the claims are payable.Such an exchange of promises forms a binding contract.
Learning Objectives
- Pinpoint circumstances that are exclusions to the consideration prerequisite.