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An agreement cannot enforceable without lawful consideration- Critically analyze the basic legal provisions of consideration in the law of contract
INTRODUCTION
Consideration is an essential element for the formation of a contract. 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. In a bilateral contract—an agreement by which both parties exchange mutual promises—each promise is regarded as sufficient consideration for the other. In a unilateral contract, an agreement by which one party makes a promise in exchange for the other’s performance, the performance is consideration for the promise, while the promise is consideration for the performance.
Consideration must have a value that can be objectively determined. A promise, for example, to make a gift or a promise of love or affection is not enforceable because of the subjective nature of the promise.<href=”#_ftn1″ name=”_ftnref1″ title=””>[1]
Traditionally, courts have distinguished between unilateral and bilateral contracts by determining whether one or both parties provided consideration and at what point they provided the consideration. Bilateral contracts were said to bind both parties the minute the parties exchanged promises, as each promise was deemed sufficient consideration in itself. Unilateral contracts were said to bind only the promisor and did not bind the promisee unless the promisee accepted by performing the obligations specified in the promisor’s offer. Until the promisee performed, he or she had provided no consideration under the law.
DEFINITION
Consideration:
Considerations – Considerations are a legal concept pertaining to contract law. In order for a contract to be formed there must be a promise or promises of something of value such as goods, funds, services, performances, non-performances etc… These are the considerations of the contract. In a Bilateral contract, if Bob offers Tim $500 to paint his house, the considerations would be Bob giving Tim $500 and Tim painting Bob’s house. In a Unilateral Contract if a radio station promises 2 game tickets to the 1st caller to answer a question correctly, the considerations are the tickets given by the radio station and the 1st person to correctly answered questions. In common law considerations are a requirement for forming a contract.
Legal Sufficiency – The considerations must have value that is recognized by law to make them legally sufficient. These considerations must be either a benefit or a detriment to a party involved in the contract. A legal benefit is when a party receives something of value that they previously didn’t have the right to. A legal detriment is when someone performs an act that they were not previously obligated to do or not perform an act that they previously were obligated to do.
Identify the relevant legal area
Legal problem solving involves a number of distinct steps: first, the identification of both the legal and factual issues in a given situation; secondly, the selection of the law relevant to the scenario from a wide range of cases and statutes; thirdly, the application of this law to the specific facts of the problem; and fourthly, a conclusion in which you either advise the parties of the probable outcome of the case, or summarize your discussion of the issue raised by the problem, depending on the instructions you have been given. As well as being an essential skill for students, problem solving is a skill used by professional lawyers on a daily basis.
In planning and writing your answer you will need to:
- <href=”#Identify”>Identify the issues
- <href=”#Select”>Select the relevant law
- <href=”#Apply”>Apply the law
- <href=”#Conclude”>Conclude with advice
The first step in producing a good answer to a problem question is to identify the issues. This is a matter of identifying what the question is about from a legal point of view. At the planning stage, you will need to be reading through the question with a view to spotting and noting the issues. Identifying the issues is essentially a process of analysis, which in this context means separating the question into its distinct parts recognizing each fact and issue, and then ranking those facts and issues in terms of relevance and importance. At the writing stage you will write a short opening paragraph, setting out the issues you have identified and which you will then address in your answer.
The testing of skills begins with the reading of the problem question. First you need to break down the problem and identify the material facts. If, in the facts of the problem, you are told a child is seven years old asked: ‘Why have I been told this? What is the legal significance of this fact in the context of the question?’ The only true exception to the proposition that all the facts are included for a reason (namely to be commented upon in answering the question) is that some facts are included simply to make the story more readable. There is, however, also a quasi-exception, where facts are introduced by way of red herrings. Red herrings will only distract those who do not really understand the relevant law, and therefore their introduction is a perfectly legitimate way of testing the true extent of the students’ understanding. In other words, and being perfectly consistent with the general principle that all facts are mentioned for a reason, red herrings are introduced so that you may comment on them, even though your only comment will be to identify their irrelevance.
Secondly, you need to identify the legal issues raised by the facts. It may be that you consider the facts to be too far-fetched to be taken seriously. Two points arise. First, the facts of some of the most important legal cases are themselves quite improbable. Secondly, and perhaps more importantly, you must understand that the questions are constructed in order to bring out certain points, which the examiner expects you to be able to identify and discuss. This may well result in an intrinsically improbable story line; but the problem questions never pretend to be essays in social realism anyway.
Finally, you need to identify any legal claims and defenses that the parties may have. A party who has no recognizable legal claim, or a party who does have such a claim but who will be met with a cast-iron legal defense, will have no legal redress. Evaluating possible claims and defenses at the planning stage will not only help you to identify the contentious legal issues raised by the problem, but will also enable you to dispose of any straightforward and uncontentious issues in a sentence or two.
Distinguish between relevant and irrelevant facts
Relevant facts means that the evidence provided goes toward establishing whether a person met one or more of the required elements of a crime.
Irrelevant facts mean it does no have anything to do with proving any of those elements. Often an attorney will try to get irrelevant evidence introduced for other factors, such as showing prior crimes, or getting the sympathy of the jury, which may or may not be applicable to what is being tried.
- Differential/ marginal/variable/incremental costs are always relevant
- Cash costs and future costs are always relevant
- Past costs or sunk costs are always irrelevant
- Fixed costs are always irrelevant unless they are incremental
Well as determining whether consideration is valid on the grounds of being executed, the court will also seek to ensure that;
It is necessary that consideration should be according to the desire of the promise. No one should do or not do an act according to his own wishers or according to the wisher of other person. An act done without the desire of the promise will be voluntary act and as such will not be within the definition of consideration.<href=”#_ftn2″ name=”_ftnref2″ title=””>[2] If anyone doesn’t follow the rule, contract is called unvalued. Ex: Mr. Rohim sees Kamal’s house is full by fire and this time rohim helped to kamal. But rohim wanted money but kamal doesn’t called to rohim so, this time kamal isn’t bound to give the money.<href=”#_ftn3″ name=”_ftnref3″ title=””>[3]
Consideration must be real. Consideration must have some value in the eye of law. It can’t be false, uncertain, impossible or fictitious. Court gives high value for contract and consideration. Ex: Rana said his girl friend, if you give me sun then I give 2 lac take. This type of agreement isn’t real. The contract explains ‘Promise or any other person can give consideration. But there is no mention in the act about giving consideration to the promise’<href=”#_ftn4″ name=”_ftnref4″ title=””>[4].
It needn’t be adequate. If consent was freely given to the agreement, “an agreement to which the consent of the party is freely given is not void merely because the consideration is inadequate, but inadequacy of the consideration may be taken into by the court in determining the questions whether the consent of the promise was freely given”<href=”#_ftn5″ name=”_ftnref5″ title=””>[5]. Ex: X agrees to, he buy 100 plats at 200 Taka. X’s consent to the agreement was freely given. This agreement is the inadequacy of the consideration.
LIGAL PRINCIPLES & SUGGEST SOLUTIONS
Well as determining whether consideration is valid on the grounds of being executed, the court will also seek to ensure that;
It is necessary that consideration should be according to the desire of the promise. No one should do or not do an act according to his own wishers or according to the wisher of other person. If someone does so, it will not be treated as a consideration. An act done without the desire of the promise will be voluntary act and as such will not be within the definition of consideration.<href=”#_ftn6″ name=”_ftnref6″ title=””>[6] If anyone doesn’t follow the rule, contract is called unvalued.
The contract explains ‘Promise or any other person can give consideration. But there is no mention in the act about giving consideration to the promise’<href=”#_ftn7″ name=”_ftnref7″ title=””>[7].
Consideration must be real. Consideration must have some value in the eye of law. It can’t be false, uncertain, impossible or fictitious. Court gives high value for contract and consideration.
Consideration may be past, present or future, it has done or abstained from has abstained from doing/promises to do or to abstained from doing/promises to do or to abstain from doing. Consideration may consist of either something done or not done in the past or done or not done in the present, or promised to be done or not done in the future.
If any contract made without consideration is treated as valid if it is in writing and registered and if it is made for natural and affection.<href=”#_ftn8″ name=”_ftnref8″ title=””>[8] If promise to compensate wholly or in part, a person voluntarily doing something for the promisor.
It needn’t be adequate. It is not possible for the court to decide the adequacy of the consideration. The parties to the contract will decide the amount of consideration. The court will only enforce an agreement. If consent was freely given to the agreement, “an agreement to which the consent of the party is freely given is not void merely because the consideration is inadequate, but inadequacy of the consideration may be taken into by the court in determining the questions whether the consent of the promise was freely given”<href=”#_ftn9″ name=”_ftnref9″ title=””>[9].
Consideration must be legal and not immoral or opposed to public policy. If the object or consideration of an agreement is illegal, it can’t be enforceable by law. If the considerations illegal, immoral or opposed to public policy, in that case no contract based on that will be enforceable by law.
DEMONSTRATE INDEPENDENT LEGAL RESEARCH
Contract out of love and affection, “If agreement made without consideration is void unless it is expressed in writing and registered under the law for the time being enforce for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other.”<href=”#_ftn10″ name=”_ftnref10″ title=””>[10] Ex: This time Rana allowance if any person find my mobile so, I gave 100 Taka only. Then Suhan find the mobile and give it and take money. This is valid contract.
Executed gift is, “nothing in this section shall affect the validity, as between the donor and done, of any gift actually made”. Ex: X gifts her car to Y, and he must be complied written data. This time contract is valid.
Contract for appointing agent it must be, “No consideration is necessary to create an agency.”<href=”#_ftn11″ name=”_ftnref11″ title=””>[11] Ex: Rana give a take care authority to Sohan. This time sohan isn’t a owner, he is care taker.
Contract for repayment of time barred debt, “If agreement made without consideration is void, unless it is a promise in writing and signed by the person to be charged therewith or by his agent generally or specially authorized in that he half, to pay wholly or in part a debt of which the creditor might have enforce payment but for the law of limitation for suits.”<href=”#_ftn12″ name=”_ftnref12″ title=””>[12] Ex: Rohim said his wife; he gives 500 take every day and this agreement is taken by the written and notification. But next rohim don’t pay money so, this time agreement is not right and this agreement consider in “love and affection” point of view.
An agreement made without consideration is void. It means that consideration is a must in all cases.<href=”#_ftn13″ name=”_ftnref13″ title=””>[13]
Every promise may dispense with or remit, wholly or in part the performance of the promise made to him or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.”<href=”#_ftn14″ name=”_ftnref14″ title=””>[14]
EXPRESS & PRESENT
Legal problem solving involves a number of distinct steps: first, the identification of both the legal and factual issues in a given situation; secondly, the selection of the law relevant to the scenario from a wide range of cases and statutes; thirdly, the application of this law to the specific facts of the problem; and fourthly, a conclusion in which you either advise the parties of the probable outcome of the case, or summarize the discussion of the issue raised by the problem, depending on the instructions have been given.
This reason is insufficient to judge a commercial contract or promise enforceable as it lacks valid, valuable and legal basis for the reason. Also refer to valuable consideration. A good consideration doing something based on natural affection, generosity, love or moral duty. A good consideration must be maintains all rule. The necessary factors for consideration can be summed up as follows;
· There must be desire of the promisor.
· It should be real.
· Law must be reasonable.
· It mustn’t break rule.
· It mustn’t be immoral, non-legal, opposed to public policy.
· Its must maintain present, past and future.
· It’s stated to promise or any person.
There are conditions of good consideration. Every law must be following all this.
CONCLUSION
When a promisor makes a clear and definite promise on which the promise justifiable relies, the promisor is bound by the promise, even if it was insufficient to form the basis of a valid, legally binding contract.
Promissory maintain requires the following elements are, The promise was clear and definite, justifiable relied on the promise, substantial and of a definite character and will serve the best interests of justice. Consideration of some sort or other is so necessary to the forming of a contract, that an agreement to do or pay something on one side, without any compensation on the other, will not at law support an action and other activities.
Promises enforceable, despite the lack of consideration are, to pay a debt otherwise discharged by limitations, in rare cases and to charitable institutions. This situation is effect one contract and consideration
BIBLIOGRAPHY
Web Sites:
1. Web address: www.en.wikipedia.org/wiki/contract, collected on February 25, 2012 at 8.00 am to 9.00 am.
2. Web address: www.law.freeadvice.com/general_practice/contract_law, collected on February 25, 2012 at 8.00 am to 9.00 am.
3. Web address: www.lawteacher.net/contract-law, Retrieved on February 26, 2012 at 11.30 pm to 12.30 am.
4. Web address: www.lawteacher.net/consideration-rules.php, Retrieved on February 29, 2012 at 7.00 pm to 9.30 pm.
5. Web address: www.nolo.com.legal…/consideration-every-contract -needs-33361.ht, collected on February 29, 2012 at 8.30 pm to 9.00 pm.
6. Web address: www.4lawsschool.com/contracts101/consideration.htm, collected on February 29, 2012 at 8.30 pm to 9.00 pm.
7. Web address: www.blurtit.com/q2587899.html, collected on February 29, 2012 at 10.00 pm to 10.30 pm.
8. Web address: www.in.asswers.yohoo.com, collected on March 01, 2012 at 10.00 am to 10.30 pm.
9. Studying Law, by Simon Askey and Ian McLeod
11. http://legal-dictionary.thefreedictionary.com/consideration
Report & Book:ss
1. “Business Law”, Writer is “Mohammad Khalakurjaman”, Published by National University.
<href=”#_ftnref1″ name=”_ftn1″ title=””>[1]. The commercial Law is writer by A H Faruk
<href=”#_ftnref2″ name=”_ftn2″ title=””>[2] Refer to M. Ahammer in Commercial Law or Business Law. Page no. 14.
<href=”#_ftnref3″ name=”_ftn3″ title=””>[3] Refer to M. Khalodul jaman in Bangladeshi law . page no. 76.
<href=”#_ftnref4″ name=”_ftn4″ title=””>[4] Mohammad. Alim
<href=”#_ftnref5″ name=”_ftn5″ title=””>[5] Section 25 – explanation 2 of the contract Act lays.
<href=”#_ftnref6″ name=”_ftn6″ title=””>[6] Refer to M. Ahammer in Commercial Law or Business Law. Page no. 14.
<href=”#_ftnref7″ name=”_ftn7″ title=””>[7] Mohammad. Alim
<href=”#_ftnref8″ name=”_ftn8″ title=””>[8] Section 25 (1) – Business law.
<href=”#_ftnref9″ name=”_ftn9″ title=””>[9] Section 25 – explanation 2 of the contract Act lays.
<href=”#_ftnref10″ name=”_ftn10″ title=””>[10] Section 25 (1), and Raj Luckhy Debee Vs. Bhootnath (1900) said.
<href=”#_ftnref11″ name=”_ftn11″ title=””>[11] Section 185 said.
<href=”#_ftnref12″ name=”_ftn12″ title=””>[12] Section 25 (3), and Appa Rao Vs. Surya Prakash (1900) said.
<href=”#_ftnref13″ name=”_ftn13″ title=””>[13] Show is, www.allinterview.com/showanswers/76627.html.
<href=”#_ftnref14″ name=”_ftn14″ title=””>[14] Section 63, and Kapur Chand Godha Vs. Mir Nawab Himayat Ali Khan (1963) said.