Good Example Of Research Paper On Consideration
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Consideration is factored as one of the core elements of a valid contract. The parties that enter into an agreement recognized as lawful must outline either party’s commitment in the form of service, monetary value or a promise to refrain to a particular action. By definition, consideration refers to the benefit that contractual parties expect from each other at the end of the contractual period (Eisenberg 1754). Consideration form the basis of a binding agreement since the involved parties must settle on a common ground that serves the essence of their relationship. In case the parties fail to agree on the preferred consideration, the contract may lose its binding ground. However, some acts possess natural consideration and bear legal consequences if the victims violate its rules. For example, sale of alcohol is prohibited to persons under the age of 18 years; hence the alcohol trader owes the government an act of consideration to refrain from trading alcohol with underage citizens.
Such a consideration is unilaterally recognized by law regardless of whether a contract existed between the parties. The rule of common law emphasizes that a legal binding agreement must attain a sustainable consideration between the promisor and the promise. Notably, not all laws value the element of consideration in contract. For instance, Scotland nation that uses the Roman based legal tenets overrules the element of consideration as part of a legally binding contractual agreement. Instead, the Roman law advocates Estoppel as an alternative for consideration. For example, if a person promises a gift to his girlfriend and fails to deliver, the agreement bears no legal backing because neither of the parties suffers nor gains. However, through the doctrine of Promissory by Estoppel, the court may award damages to the promise subject to proof that the promisee incurred loss upon anticipating the promisor’s gift.
Types of consideration
This type of promise is as future consideration. Future consideration prevails when both parties commit to a particular promise in the future. Legally, the promisor and the promise are presumed to have concurred on the value of the consideration and the period of the contract. In that case, the consideration is bilateral and bears equal commitment to all pertinent parties and thus holds legal sufficiency for redress in of (Mughal and Munir 29) For instance, if Y and x enter into a logistic contract whereby Y would deliver a fleet of tractors to X at the end of one month. In turn, X promises to pay for the tractors upon delivery. In such a case, the consideration stands valid for Y and X. If Y defaults on the agreement, X has the legal privilege to sue Y and seek redress. Hence, executor consideration mature at the end of the agreed period, after which the promisor’s obligation to deliver goods becomes executed upon delivery.
In this type of consideration, liability for the promise is unilateral on the part of the promisor. Also noted as present consideration, it occurs when one party offers a service or a good to another party with an assurance to pay at an agreed time in the future. It would be worth noting that the future commitment is the determining factor for a consideration to be. However, if both parties enter into an agreement and exchange considerations immediately, the agreement is an executed contract and not a consideration. For instance, in the sale of goods contract, a vendor may deliver goods to a retailer on the credit assured to receive payment after two weeks. The consideration is executed by the vendor but remains executory on the part of the retailer until the retailer pays the goods. In the case of default, the vendor is bound by to seek for remedy in the court of law. This type of consideration is applicable in the business sector where wholesalers offer goods to the retailers on credit under written agreement to pay at a particular date.
Under the English laws, past consideration holds no legal backing and the involved parties cannot seek for damages in case of default. Consideration is only valid if it the parties agreed on the day of contractual agreement. An act is categorized as a past consideration if it occurred before the seal of the agreement. Neither party can use the promise to induce the other to an obligatory to deliver on the promise. For example, a person may agree to till the neighbor’s land for two weeks. After two weeks, the neighbor promises to pay $10 for the service. In such scenario, the contract is a past consideration because the parties had not agreed on the price before entering into an agreement hence the worker cannot sue the neighbor in case of underpayment. The law demands that a legal consideration process is by bargaining approach for parties to concur on a universal commitment. Unlawful declaration of a consideration as Past consideration deters third party claimants from incurring undue benefits or detriment from past situations.
Exceptions to past consideration
The law could endorse the validity of a past consideration under the following exceptions.
If the either party had made a request
The consideration would be valid if the promisor requested the promise to offer the services for a later discussion on the consideration. The element of acceptance that seals a contract consideration validates the act and, therefore, the consideration is executor (McKendrick 145). The promisee has the right to sue the promisor if the latter denies his obligation. The case for Lampleigh v Braithwait where the claimant succeeded to obtain a king's pardon for the defendant who had committed murder. Upon success, the defendant offered 100 pounds in reward to the claimant but never obliged. The judge held the consideration as valid because the parties had agreed; thus the defendant had to pay the money.
Application of Bills of Exchange
In a business perspective, most business trade on credit among the suppliers and the final consumers. The creditors sign against specific documents that append their commitment to honor the payment at a particular date. Such a case vividly overwhelms the limits of past consideration since the promisor has delivered the payment.
If both parties agree and are aware of future obligation
For instance, parties entering into a contract may be aware of a monetary obligation that would ensue in the midst of the contract period. Upon the promise that they would pay the money validates the past consideration. For instance, business partners could forecast and agree on an expansion investment program after two years. The promise holds validity despite the parties not discussion capital contribution ratio in the past. An organization bankruptcy is another exception of the consideration. If a bank suffers financial crisis, the account holders may seek consideration for the principal amount and the interest in the future when the institution recovers from insolvency.
Elements of consideration
Consideration must have legally accepted sufficient value
Parties entering into a contract ought to define the value of the consideration that binds their contract. The law holds that the value of the promise should endorse fairness in that either party would accumulate legal benefits while the other incurs legal detriment. Therefore, the promise must be vividly identified by to exercise its jurisdiction. For example, if a party’s consideration is a pre-existing duty, the contract is invalid. Contracting a police officer to guard a private home is void contract since the promise infringes on the officers assigned mandate.
The judgment case of Labriola v Pollard group Inc held that the imposition of non-competitive and confidentiality agreement by Pollard group was illegal since the restrictive covenant was in existence. Hence, the company violated the principle of the sufficiency value, which underlines that a consideration should have equal legal benefits and legal detriment for all parties. Consequently, the clause was declared null and void (Spears 1)
Bargaining must precede consideration
If parties commit to entering into a service delivery agreement, a discussion process leads to concurrence on the value of service delivered. Failure to agree on compensation package would result in voidness of the contract. For instance, a wholesaler offers goods to the retailer upon agreeing on the retail price, the discount rate and the mode of payment. Bargaining records could serve as evidence for an executory consideration if either party contravenes the agreement. In a unilateral contract, bargaining virtually exists on the fact that the promisor has an automatic obligation to deliver on the prescribed roles.
Forbearance act sue
Claims for consideration lose its legal validity when the promisor agrees to compensate the promise with the delayed or denied consideration. Upon benefit from the promisor’s action, promisee has no right to pursue legal damages. The settlement approach outside the court utilizes the sufficiency value and the bargaining aspect to define a universally accepted consideration by pertinent parties.
In a legal perspective, contract by the promisor to deliver a service that matches his obligated service is declared void. In a contract, mutual benefit must exist among parties; hence rewarding the individual for his job would contravene the principle of equal sufficiency in value. It would be unlawful to contract government agriculturalists to manage your plants while the latter has been employed by to offer the service to the citizens at no cost. This factor condemns double earning undue advantage above the agreed sufficiency value.
The promisee must show proof of consideration
It is the responsibility of the promise to prove the existence of a legal consideration with the promisor to facilitate claiming for compensation. In most cases, developing a formidable proof to show the promisor’s negligence or ascendance of service is unrealistic, therefore; the promise has the legal discretion to convince the jury of consideration and sufficiency value.
Eisenberg, Melvin Aron. "The emergence of dynamic contract law." California Law Review (2000): 1743-1814.
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press, 2014.
Mughal, Justice R. Dr, and Munir Ahamd. "Law of Consideration in Contract."Munir Ahamd, Law of Consideration in Contract (October 26, 2012) (2012).
Spears, Lane P. "Washington refuse to enforce no-competent agreement signed after the commencement of at- will employment-Continued and additional training may be insufficient consideration." Employer adviser hotsheet (2014): 1-3. Web. 22 Mar. 2015.
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