Unilateral contract: A contract in which one party makes a promise and the other party performs an action. Long court cases and writings abound on the subject, which is a consideration. In short, there are two other important things to know. First, the consideration does not have to be money. It can be something of value, so it can be another object or service. Bilateral treaty: A contract in which the parties exchange a promise for a promise. Regardless of the type of contract you sign, you`ll likely hear the term «consideration.» In addition to the offer and acceptance, «consideration» is one of the essential elements of a contract. But what does this really mean? Fraud Act: The basis of most modern laws that require certain promises to be made in writing to be enforceable; it was passed by the English Parliament in 1677. In the United States, although state laws vary, most require written agreements in five types of contracts: contracts to assume someone else`s obligation; contracts which cannot be performed within one year; contracts for the sale, lease or mortgage of land; contracts taking into account marriage; and contracts for the sale of goods with a total value of $500 or more. In Currie v. Misa , the court stated that consideration was a «right, interest, profit, advantage or abstention, disadvantage, loss, liability».
Therefore, the consideration is a promise of something of value given by a donor in exchange for something of value given by a promisor; And generally, the question of value is a good, money or a stock. Acting with leniency, for example.B. an adult who promises to quit smoking is only enforceable if you waive a legal right.    The concept of consideration has been broadened from the original common law, since the common law theory that consideration is equivalent to a transaction was somewhat limited for the following reasons: The same applies if consideration is a service for which the parties had already entered into 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. Second, what you are negotiating for does not have to meet the value standards of others, and the courts have always refused to comment on this issue. In other words, if you had offered to sell your bike to your neighbor and asked for his collection of antique cigar boxes in exchange, and your neighbor had agreed to pay that amount (i.e.
give you his collection of cigar boxes for the bike), it doesn`t matter if the deal may seem unfair to some. You made an offer for the bike, your neighbour accepted it for review, and you both wanted to make that deal, and you are both allowed to do so; It is therefore a viable treaty. Whether someone else thinks it`s right or wrong is irrelevant until it`s unscrupulous. Essentially, the consideration is simply what you give up in the agreement for what you get out of the agreement. The idea of consideration is crucial for contract law, because for a contract to be enforceable, there must be a «mutual obligation». In other words, for a contract to be valid, both parties must be required to perform the contract. Consideration, which is the obligation that the contracting parties enter into between themselves, is at the heart of the rule of «reciprocity of the obligation» and, therefore, a contract without consideration is not enforceable. For example, a contract in its most basic definition is nothing more than a legally enforceable promise. The following cases amount to ignoring this: In general, courts do not consider whether the agreement between two parties was financially fair – only that each party passed on a legal obligation or an obligation to the other party.   The determining issue is the existence of a consideration, not the relevance of the consideration.
The values between the consideration provided by each contracting party to a contract need not necessarily be comparable. Systems based on Roman law (including Germany  and Scotland) do not need to be taken into consideration, and some commentators consider this unnecessary and have proposed abandoning the doctrine of consideration and replacing it as the basis of treaties.  However, legislation, not judicial development, has been presented as the only way to eliminate this deep-rooted common law doctrine. Lord Justice Denning said that «the doctrine of consideration is too entrenched to be overturned by a crosswind».  Reciprocity of obligation: The agreement of both parties to a contract to be bound in any way. Suppose A is a film screenwriter and B runs a film production company. A said to B, «Buy my script.» B says, «How about that – I`m going to pay you $5,000 so your film won`t be produced for another year. If I produce your film this year, I will give you $50,000 more, and no one else will be able to produce it.
If I don`t produce your film this year, then you can leave. If the two subsequently come into conflict, the question of whether a contract exists is answered. B had an option contract – he could decide if he wanted to produce the script or not. B`s counterpart was the downward amount of $5,000 and the possibility of $50,000. A`s counterpart was the exclusive rights to the film script for at least one year. As a result, many organizations consider consideration to be equivalent to any factor that makes a contract or promise enforceable. This concept, which equates consideration with any factor that makes a contract enforceable, is called the «enforceable factor» theory. For example, the legal definition of counterparty is based on the concept of a «negotiated exchange».
This means that both parties get something they have agreed, usually something of value for something of value. The consideration may be as large or small as the parties mutually agree to an exchange between them. For example, if you buy a dress, it is between you and the seller to agree on the price. When there is a valid consideration, the courts rarely intervene to decide whether the agreement is unfair or disproportionate. However, if a party is trapped in an unfair business by hiding important information or acting in bad faith, this can affect the legal validity of the contract. 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.
On the other hand, if you tell your neighbor that you will give her the bike if you can`t sell it at your flea market, there is no consideration because she has not agreed to pay you anything. His promise to give him the bike may be a binding promise, but it is not an enforceable contract. Consideration is usually not an element of a gift. There are a number of common questions as to whether there is consideration in a contract: the other doctrine of contract law that has not emerged from the common law is the status of fraud. The Statute of Fraud, adopted by each of the fifty States, is a body of law that determines when a treaty must be written to be enforceable. Although we have tried to present the basics of consideration in contracts here, it can be very complex. 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.    This legal obligation may arise from the law or from an obligation under a previous contract.
If you want to be sure that the agreements you enter into on a personal or professional basis contain all the right elements, please use our online resource to access free, customizable, contracts drafted by lawyers for general services, contracts for specific services or general contracts for products. Most contracts contain one or two lines indicating that valid and sufficient consideration is the basis of the contract. However, the mere mention of something in the contract does not prove the existence of a valid consideration […].