The concept of consideration in modern contract law

What is the consideration of a contract? What are the elements of a contract? The technical requirement is either a detriment incurred by the person making the promise or a benefit received by the other person. Under classical contract theory , consideration is required for a contract to be enforceable. Consideration Consideration is a central concept in the common law of contracts.

Modern contract theory has also permitted remedies on alternate theories such as promissory estoppel).

In the legal system, the term consideration in contract law refers to something of value given to someone in return for goods , services , or some other promise. A valid contract must include consideration for every party involved. In simple terms, consideration is the basic reason a party enters into a legal contract. To explore this concept, consider the following consideration definition. See full list on legaldictionary.

Something of value given in exchange for something else of value , usually in the context of a contract. In order for a contract or agreement to be legally binding, every party to the contract must receive some type of consideration. In other words, a contract is a two-way street, so each party must receive something of value from the other party or parties.

If one or more of these elements are missing, the contract lacks the necessary requirements, it could potentially be deemed invalid by the court. The required elements of consideration include: 1. The contract must include a bargain for the terms of the exchange. This means there must be something that is worth bargaining over to both the parties. There must be a mutua. Most often, services or goods are exchanged or promised in a contract , though consideration may be whatever the parties agree to.

A contract may be deemed invalid by a court if it lacks recognizable consideration. Although the exchange of certain items or terms may seem like something valid on which to create a contract , not just anything meets the definition of consideration. Some of the scenarios where a contract lacks consideration includes: 1. The agreement is more of a promise of a gift, rather than a contract 2. One of the parties involved was already legally obligated to perform as specified by the contract 3. Damages – A monetary award in compensation for a financial loss, loss of or damage to personal or real property, or an injury. Obligation – A promise or con. It can take a number of forms: money, property, a promise, the doing of an act, or even refraining from doing an act.

As it has evolved over centuries to mean one thing instead of another in contract formation , it has primarily served as the line of demarcation between those contracts that are enforceable by courts and those not. It may consist of a promise to perform a desired act or a promise to refrain from doing an act that one is legally entitled to do. The concept has been adopted by other common law jurisdictions.

The bargain theory of consideration is certainly not mandated by contract doctrine. The notion that contracts require an offer and an acceptance is one of the last remaining bastions of classical contract law. In overturning almost two hundred years a legal history, the Court of Appeal held that an agreementto vary a contract is enforceable without consideration ’. BODY Traditional approach. Two rules were existed under the word ‘ consideration ’ in the law. Get started Start Your Contract for Services Answer a few questions.

The legal definition of consideration is based on the concept of a “bargained-for exchange. Under the Common Law , the words “ consideration ” and “bargain” are basically used interchangeably, and the concept that equates consideration and bargain is called the “bargain theory” of consideration. In a valid contract , the consideration is the portion that explains the legal value that will be exchanged. Due consideration has not taken place, but the doctrine of economic duress is sufficient to void the contract.

However, it is arguable as both parties have the intention to create a legal relation, which is an element that binds the parties to the contract. Thus, the doctrine of consideration is useless. Under contract law , consideration must be present and both benefit and cause detriment to both parties. In this case, only Pollard benefited from the new non-competitive agreement. According to contract law , an agreement made between two or more people or business entities, in which there is a promise to do something in return for a gain or advantage, is legally binding.

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