What Are the Rules of Consideration in Contract Law

The decision in Williamâs v. Roffey had moderate influence throughout Britain and the Commonwealth, after the promulgation of the decision, the principle was immediately followed in England and Wales, and it was also approved by their Court of Appeal in New Zealand. In addition, the principles of Williams v. Roffey have been used to decide other cases; It is known that about six months after Williams v. Roffey, in Anangel Atlas Companika Naviera SA v. Ishikawajima-Harima Heavy Industries Co Ltd (No. 2), Justice Hirst applied the Williams-v. principle. Riffey.

There are several simple examples of considerations that can make the concept of consideration easy to understand. For example, two people say A and B, enter into a contract in which A promises to deliver 15 curtains to B in one month and B promises to pay Rs 30,000 on delivery, and then in this case, B`s promise is the counterpart to A`s promise. Moreover, A`s promise is a consideration of B`s promise. In another example, A has taken out a loan from B, but has not yet repaid. B agrees not to take legal action against A if A promises to repay the loan within one week. In this case, B`s agreement is based on A`s promise to repay being taken into account. A contract requires six elements to be enforceable: Suppose B commits a tort against A that causes $5,000 in damages and $3,000 in punitive damages. Since there is no guarantee that A would win against B if he went to court, A can agree to drop the case if B pays $5,000 in damages.

This is sufficient consideration because B`s consideration is a guaranteed recovery and A`s reasoning is that B only has to pay $5,000 instead of $8,000. When using Promissory Estoppel, it is not necessary to determine whether any legal considerations were missing from the original agreement. It can always be used to protect the interests of that applicant and prevent the original promisor from withdrawing his promise if the promisor has already acted on it. The doctrine of consideration arose because plaintiffs in court proceedings were not allowed to make presumption claims in court simply because the defendant promised to do something. Therefore, something had to be created so that the plaintiff could prove his claim and claim damages. But the most important clause in Labriola`s contract was the restrictive agreement that prohibited him from working for a competitive company for a period of three years. In addition, no predetermined geographical area was mentioned. This meant that if Labriola were separated from Pollard Group, Inc., he would be banned from working for a commercial printing company for a period of three years, regardless of where in the world the new job was located! It is indeed a restrictive covenant! Knowledge of the doctrine of consideration in contract law is important for every entrepreneur, as there may be a sense of distrust when doing business in the Western world. Contract law began in the common law of the Middle Ages.

At the time, there were concerns about property rights and security, which required the formation of contract law. If the promise and consideration take place simultaneously, it is present or executed consideration. For example, Peter walks into a store, buys a bag of chips and pays locally. Example: A granted an estate to B and asked him to make an annual payment to A`s brother. By an agreement reached the same day with A`s brother, B promised to carry out A`s instructions. Subsequently, B refused to make payment to A`s brother on the ground that there had been no consideration from A`s brother. The Court found that sufficient account had been taken of B`s promise to A`s brother, since in India the consideration does not necessarily have to be based on the promise, but can come from any other person. The value of the exchange must be legally sufficient.

This means, among other things, that the consideration of each party must be of equal value. In our example, the $295 fee and the work done to repair the toilet were about the same, so the consideration is legally sufficient and the contract is valid. The consideration must also be negotiated. This means that both parties must agree to give up something as part of the contract. In our example, Mr. Smith forfeited $295 and Ms. Jones donated her time and expertise in plumbing. Peter took out a loan from his friend John.

However, he has not yet repaid the loan. John promises not to sue Peter if he promises to repay the loan within a week. In this case, John`s abstinence is due to the consideration of Peter`s promise to repay the loan. Peter`s wife agrees to withdraw the lawsuit she filed against him in exchange for his promise to pay his monthly child support. It is a good consideration and it has value in the eyes of the law. If the promisor is already obliged, either by his promise or by law, to perform or abstain from performing a certain action, then this is not a good consideration for a promise. In contract law, consideration is simply the exchange of one thing of value for another. This is one of the six elements that must be present for a contract to be enforceable. The consideration must be both legally sufficient and negotiated by the receiving party. 1. Offer – One of the parties has promised to take or refrain from taking certain actions in the future.

2. Consideration – Something of value was promised in exchange for the declared action or non-action. This can take the form of a large amount of money or effort, a promise to provide a service, an agreement not to do something, or trust in the promise. Consideration is the value that leads the parties to enter into the contract. Peter and John make a contract in which Peter promises to deliver 15 curtains to John in one month. In addition, John promised to pay Peter an amount of 3,000 rupees upon delivery. In this contract, John`s promise to pay 3,000 rupees on delivery is in exchange for Peter`s promise. Peter`s promise to deliver 15 curtains is also the counterpart to John`s promise to pay. An example of consideration in a contract could be money paid for a service or good that is sold for money. Current consideration – When one of the parties has fulfilled its part of the promise which is the consideration to be provided by the other party, it is called current consideration.

Let`s say A has lost his watch and offers to pay 300 rupees to the person who finds it. If B finds the watch and hands it over to A, A is obliged to pay Rs 300 to B as part of this consideration. In Currie v. Misa [1], the tribunal stated that consideration was a “right, interest, profit, advantage or omission, damage, loss, liability”. Therefore, the counterpart is a promise of something of value given by a promisor in exchange for something of value given by a promise; And typically, the thing of value is a commodity, money or stock.