Please provide a valid Zip Code or City and choose a category. Please choose a category from the list. Please select a city from the list and choose a category. Please enter a valid zip code or city. Please select a city from the list. Connecting …. Are You a Lawyer? Grow Your Practice. Contents How Is Consideration Measured? Jose Rivera Managing Editor Editor. Last Updated: Jun 26, Choose Your Legal Category: Family.
Criminal Defense. Real Estate. Child Support. Other Legal Categories. X 1 Enter Zip Code or City this may not be the same place you live. What is the purpose of contractual consideration?
Reciprocity of consideration is fundamental to contract law. Accordingly, gratuities are not enforceable in law. You do not offer to do anything in response. As there is no consideration provided by one party, there is no contract. Exception to requirement for Consideration: Deeds The exception to this, is use of a Deed.
Deeds: are written contracts must state that they are a Deed must be "signed, sealed and delivered" by both of the parties. Those words have a technical meaning which we don't cover here are not required to be supported by consideration to be legally binding have other special requirements which prevent them from being abused.
Let's put that exception to the general rule to one side. What sort of consideration is required to properly form a legally binding contract? The Essential Characteristic of Consideration There's an essential characteristic of consideration which must exist to form a contract. Above, 3 types of consideration were listed: a promise to do something a promise not to do something, and a promise to pay money. There's another requirement. The consideration must be fresh consideration. What is fresh consideration?
It's consideration which has not : been given, provided or delivered by one party already already been promised, which the party is already bound to perform Let me explain. Once a contract is signed, consideration can be either: Executed consideration , which is consideration which has been provided by the party promising it. Executory consideration is consideration has been promised but not yet performed or delivered to the other party.
So when is this essential characteristic of fresh consideration not present? Absence of Fresh Consideration 1. Past Consideration: When contracting parties are already contracted with one another, a promise to do something that they have already contracted to do can't be "fresh" consideration. Existing Obligation or Duty: Likewise, if a party is already required to do something by law, then that also can't be fresh consideration.
The usual forms of these are: an existing obligation to perform a contract A promise to perform an existing contractual obligation in an existing contract is something which the person is already legally bound to do. However if a party promises a superior performance of the requirement, that might be sufficient.
To be effective, consideration must be valuable and something you wouldn't have without the agreement. For example, if you back into someone's car and cause significant damage, the person who owns the car has the legal right to sue you. With consideration , each party has something at stake in the contract. Without it, the contract would be considered a gift.
In a legal sense, gifts are very different from contracts. If a party can't answer why they entered the agreement, there likely isn't proper consideration.
Conclusion Consideration is a benefit which must be bargained for between the parties, and is the essential reason for a party entering into a contract. Consideration must be of value and is exchanged for the performance or promise of performance by the other party such performance itself is consideration. In a contract, one consideration thing given is exchanged for another consideration. Acts which are illegal or so immoral that they are against established public policy cannot serve as consideration for enforceable contracts.
Contracts may become unenforceable or rescindable for failure of consideration when the intended consideration is found to be worth less than expected, is damaged or destroyed, or performance is not made properly. Without lawful consideration is not meaningful for any valid contract.
Contract considered many essential elements and lawful consideration is integral part or element of a valid contract. Which Lawful consideration follows some rule then we called good consideration. But some exceptions to the rule — No consideration, No contract. In English law a contract under seal is enforceable without consideration.
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