M221 : Business law : Consideration is One of the Important Factors

Answer:

Importance of Consideration in a contract

As per contract law, agreements which are made out to love and affection cannot become contract ever, as such consideration are merely promises which are not forcible. As major parties are required for a valid contract, same as, proper consideration is also a requisite for the same. Consideration is a very important element, as it defines liability of both of the parties of an agreement. A consideration can be anything; it can be a promise of doing a task or not to do that. But it has some value in the eye of second party as well as in eye of law (E-lawresources, 2018). If consideration would not be an essential element for contract, almost every promise between individual would have become contract.

Consideration is a factor in contract, which motivates parties to perform their promises. When two parties decides to do a task, they both need to perform some promises for each other according to deal made in between. It can say that such promises of one party are consideration for other one (Klass, 2010).

Consideration in a contract must have it is essential elements. It must be real and practical. In the case of Stilk v Myrrick (1809) EWHC KB J58 it was adhered that Consideration must be something apart from the present liability of the parties. It must bring new duties to parties of an agreement.

Consideration explains the expectation of parties from each other. In case of failure to fulfill such expectations, parties can initiate proceedings against defaulting parties. But for this it is required that such consideration must always be valid. A proper consideration can neither invalid nor illegal. If in case an agreement, there is some consideration but if the same is not valid then, such agreement cannot become contract.

If an agreement, consideration would not be there, then none of the parties shall be able to claim anything from such arrangement.

Difference between Sufficient and adequate consideration

Both these terms such as sufficiency and adequacy sounds similar, yet there are some difference in between them. Sufficient consideration is a consideration which has some value, may be not exactly what it should be. Whereas adequate consideration means the exact amount what should be there in exchange of promise.

It was held in the case Chappell v Nestle (1960) AC 87 that in a contract consideration must be sufficient but it need not to be adequate always.

Conclusion:

On the basis of this report, this can be concluded that consideration is the basis of every contract. Without the sufficient consideration, an agreement cannot turn to a contract. Consideration can be anything but must have a legal value in the eyes of law. Such consideration must be actual a valid.

Introduction:

Consideration is one of the important factors which are necessary to convert an agreement into a contract. In a contract there are two or more parties which exchange promises to each other to get something in return, this something is termed as “consideration”. Consideration must have some value in view of law.

References:

Chappell v Nestle (1960) AC 87

e-lawresources (2018). Contract Consideration. Retrieved from: https://e-lawresources.co.uk/Consideration.php

Klass, G. (2010). Contract Law in the USA. The Netherlads: Kluwer Law International.

Stilk v Myrrick (1809) EWHC KB J58