Business Law: Consideration

Consideration

-most important element and essence of contract to bind the agreement. -lack of capacity and assent voids a contract, having no consideration forms no contract at all.

Consideration

-what each party to contract gives up to the other in making their agreement, something of value must be given or promised in return for the performance/promise of performance of the other. Value promised can be money, services, property, or the forbearance of a legal act.

Adequacy of consideration

courts do not examine the adequacy of consideration exchanged. -It is enforceable even if the considerations exchanged are not of equal value -if consideration is disappointing it doesn't affect bid -doesn't matter if consideration is so slight it is considered as gift

Benefit Detriment Approach

defines consideration as a benefit received by the Promisor or a detriment(harm) incurred(bring upon oneself) by the promisee.

Forbearance as consideration

is refraining from doing an act that an individual has a legal right to do, or may consist of a promise of forbearance - a promise not to assert a claim is consideration only if it is done in good faith -a promise not to assert a bad faith claim that has no quality is not consideration

Gifts

not enforceable in courts because there is no consideration and no bargain for exchange. love and affection not consideration. -but once made or given, cannot take it back. -charitable subscription like a pledge to church is enforceable if the charity relied on it.

Illusory Promises

promise that does not impose any obligation on a party

Bargained for exchange

something of value must be given or promised in return for the performance or promise of performance of the other. (ex: $. services, property, or moderation of legal right)