Legal Consideration
A Legal Consideration is a valuable asset that is promised with a legal contract by one contractual party to another contractual party.
- Context:
- It can range from being an Invalid Legal Consideration to being a Valid Legal Consideration.
- Example(s):
- a Labor Wage.
- …
- Counter-Example(s):
- a Legal Gift, described by an employment contract.
- a Bribe.
- See: Gift (Law), Quantum Meruit, Quasi-Contract, Estoppel.
References
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/consideration Retrieved:2015-4-9.
- Consideration is the concept of legal value in connection with contracts. It is anything of value promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, abstinence from a future action, and much more. Consideration to create a legally enforceable contract entails a bargained for, legal detriment incurred by the promisee OR a legal benefit to the promisor. Under the notion of "pre-existing duties", if either the promisor or the promisee already had a legal obligation to render such payment, it cannot be seen as consideration in the legal sense.
In common law it is a prerequisite that both parties offer consideration before a contract can be thought of as binding. The doctrine of consideration is irrelevant in many jurisdictions, although contemporary commercial litigant relations have held the relationship between a promise and a deed is a reflection of the nature of contractual considerations. If there is no element of consideration found, there is thus no contract formed.
However, even if a court decides there is no contract, there might be a possible recovery under quantum meruit (sometimes referred to as a quasi-contract) or promissory estoppel.
If A signs a contract to buy a car from B for $5,000, A's consideration is the $5,000, and B's consideration is the car.
Additionally, if A signs a contract with B such that A will paint B's house for $500, A's consideration is the service of painting B's house, and B's consideration is $500 paid to A.
Further, if A signs a contract with B such that A will not repaint his own house in any other color than white, and B will pay A $500 per year to keep this deal up, there is also consideration. Although A did not promise to affirmatively do anything, A did promise not to do something that he was allowed to do, and so A did pass consideration. A's consideration to B is the forbearance in painting his own house in a color other than white, and B's consideration to A is $500 per year.
Conversely, if A signs a contract to buy a car from B for $0, B's consideration is still the car, but A is giving no consideration, and so there is no valid contract. However, if B still gives the title to the car to A, then B cannot take the car back, since, while it may not be a valid contract, it is a valid gift.
There are a number of common issues as to whether consideration exists in a contract.
- Consideration is the concept of legal value in connection with contracts. It is anything of value promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, abstinence from a future action, and much more. Consideration to create a legally enforceable contract entails a bargained for, legal detriment incurred by the promisee OR a legal benefit to the promisor. Under the notion of "pre-existing duties", if either the promisor or the promisee already had a legal obligation to render such payment, it cannot be seen as consideration in the legal sense.
2013
- http://www.treasury.gov.au/Policy-Topics/Business/Small-Business/Legal-Topics/Contracts/Agreement-making/Valid-consideration
- QUOTE: For a contract to be binding, there must be valid consideration. Consideration is the promise given by both parties as the "price" of entering into the agreement.
Without consideration a contract is not binding, unless it is a deed.
For consideration to be valid, it must have a value. In other words, each party must either give a benefit to the other party or undergo a detriment under the contract. For example, if A entered into an agreement with B in which the consideration was an amount of money which A had given B a year earlier, this would not be valid consideration. The consideration has no value because B has already received the money and is not getting any further benefit under the agreement. A on the other hand has already paid the money so is not undergoing any further detriment.
Other things which do not constitute valid consideration would include the following:
- A promise where the person making the promise has a discretion whether or not to fulfil the promise
- A promise which is too vague or uncertain
- A promise to perform an action which is already required by law
- A promise to perform the contract
- Most of the time it will be clear whether or not there is valid consideration. However, in more unusual situations it may be useful to seek legal advice in relation to this complicated area of contract law.
- QUOTE: For a contract to be binding, there must be valid consideration. Consideration is the promise given by both parties as the "price" of entering into the agreement.