What Is Consideration Contracts

The consideration must usually have value, although the value does not need to be measured in monetary terms. A promise to do something in the future can be a valid consideration. However, consideration in the past is usually not enough to support a contract. In other words, the law generally does not maintain a contract where the only consideration is a past act or service that has already been performed and/or delivered free of charge. The reason why both exist in common law jurisdictions is considered by eminent scholars following the combination of two different sons by 19th century judges. First, the requirement of consideration was at the heart of Assumpsit`s action, which had grown up in the Middle Ages and remained the normal complaint of breach of a simple treaty in England and Wales until 1884, when the old forms of action were abolished; Second, the concept of agreement between two or more parties as the essential legal and moral basis of the treaty was promoted in all legal systems by the 18th century French writer Pothier in his Traité des Obligations, which (especially after its translation into English in 1805) was widely read by English judges and jurists. The latter fit well with the fashionable theories of the will of the time, particularly John Stuart Mill`s influential ideas on free will, and was grafted onto the traditional common law requirement to support a presumption trial. [26] At common law, it is a prerequisite for both parties to provide consideration before a contract can be considered binding. The doctrine of consideration is not relevant in many jurisdictions, although current business relationships have viewed the relationship between a promise and an act as an expression of the nature of contractual considerations. If no consideration is found, no contract is concluded.

Consideration is a concept of English common law and is a necessity for simple contracts, but not for special contracts (contracts by deed). The concept has been adopted by other common law jurisdictions. A party that is already legally required to provide money, object, service or forbearance will not take into account if it simply promises to comply with this obligation. [32] [33] [34] This legal obligation may arise from the law or from an obligation under a previous contract. In general, consideration in the past is not a valid consideration and has no legal value. Previous considerations are considerations that have already flowed from promising to promising. That is, the act or tolerance of the promise is older than the promise of the promise. The consideration in the past cannot therefore be used as a basis for claiming damages. [36] The legal definition of consideration is based on the notion of «desired exchange».

This means that both parties get something they have agreed, usually something of value for something of value. Consideration can be seen as the concept of value offered and accepted by the individuals or organizations that enter into contracts. Anything of value that one party promises to the other when entering into a contract can be treated as «consideration»: for example, if A signs a contract to buy a car from B for $5,000, A`s consideration is $5,000 and B`s consideration is the car. In general, a conditional consideration is a valid consideration. The following cases amount to a breach of consideration: In most states, a contract is only recognized as valid and enforceable if it involves an exchange of consideration between the parties. Consideration can be defined as a right, interest or benefit granted by one party to the other party. This is sometimes called the counterpart. The exchange of consideration causes or motivates each party to conclude the contract.

It should be noted that a promise to do something illegal or immoral does not serve as a valid consideration. If one of the parties does not provide the promised consideration, the other party may terminate the contract. The defaulting party may also be sued for damages or certain services. Existing employment obligations depend to a large extent on State law. In general, all-you-can-eat employment allows the employer to fire the employee forever or even for no reason (as long as the reason, if any, is not expressly illegal) and allows the employee to dismiss for any reason. There is no obligation to continue working in the future. So if an employee asks for a raise, there is no problem with the consideration because the employee has no legal obligation to continue working. Similarly, if an employer requires a reduction in wages, there is also no contractual issue with consideration, since the employer is not legally required to continue to employ the employee. However, some States require additional compensation in addition to the prospect of continued employment in order to enforce the conditions required by the employer in the future, in particular the non-compete obligations. The same applies if the consideration is a service for which the parties had previously concluded a contract. For example, A agrees to cancel B`s house for $500, but halfway through work, A B says he won`t be ready unless B increases the payment to $750. If B agrees and A then leaves the job, B A still only has to pay the $500 originally agreed, as A was already contractually obligated to cancel the house for that amount.