An exception to this rule is when there is an obligation to a third party. An action taken before making a promise to make a payment or provide another service can sometimes be in exchange for the promise. For this to be true, three conditions must be met (Pao On v Lau Yiu Long [1980]): systems based on Roman law (including Germany [22] and Scotland) do not need to be taken into account, and some commentators consider them useless and have proposed abandoning the doctrine of consideration[23] and using estoppel to replace it as the basis for contracts. [24] 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”. [25] This good and valuable consideration is still an integral part of commercial contracts, is a devastating indictment of the traditional conception of contracts. In Currie v. Misa [1], the court stated that consideration was a “right, interest, profit, advantage or abstention, disadvantage, loss, liability”. Thus, consideration is a promise of something of value given by a promisor in exchange for something of value given by a promisor; and generally, the thing that has value is a good, money or a stock. Clemency, like that of an adult who promises to abstain from smoking, is enforceable only if a legal right is waived. [2] [3] [4] What if there is some form of consideration for the parties, how will the courts interpret the valid and valid rate of consideration if the parties argue about the consideration or the value of the contract? If you see contracts as a phrase such as “for valuable consideration,” the author or author party refers to the actual exchange of “goods” or “value.” For example, suppose XYZ Corp. hires Dave on a one-year contract for $100,000. Six months later, the president realizes that Dave doesn`t seem happy in his job.

The president offered Dave an additional $20,000 to stay for the duration of the contract. At the end of the year, Dave asked for the extra $20,000. There is no binding contract for the additional incentive payment. After the initial contract, Dave had already signed to work for XYZ Corp. for a full year. The additional payment is not supported by a new counterparty; Dave doesn`t give anything he hasn`t accepted before. Essentially, the parties recognize and acknowledge that there is consideration and that the consideration is good. There are a number of common questions about whether there is a consideration in a contract: consideration clauses are used to define the total amount due for coverage. These are the conditions that determine how payment is made in exchange for reciprocal consideration. Some consideration clauses contain penalty clauses if a party does not meet its requirements. Consequently, the declaration of the parties is worthless insofar as there is no consideration, since there is no binding contract. The purpose of consideration clauses is to mitigate the risk of dispute with respect to: In general, conditional consideration is a valid consideration.

However, the counterparty must meet other requirements. The consideration must be an exchange for the transaction in question; past considerations are not good. So, after a long absence, I decided to reconsider the importance of a good and valuable consideration. Well, I had to dig deep. You will not find any discussion of this in the obvious American treaties or elsewhere in the literature on the treaties. However, some courts in the United States may be challenged with nominal consideration or virtually no consideration. Some courts have since considered this a deception. Since contractual disputes are usually resolved by a state court, some state courts have concluded that the mere provision of $1 to another is not a sufficient legal obligation and that, therefore, no legal consideration is given in this type of business and, therefore, no contract is concluded. However, this is a minority position. [31] The use of the phrase “good and valuable consideration” is doubly stupid.

First of all, consideration is what it is, and saying that it has a certain quality won`t do you any good unless it actually does. This from Farnsworth on contracts 157 (3rd ed. 2004): The moral of the story is that if your contract fully recites the consideration, you should not add wording like “and other good and valuable considerations” to avoid problems of interpretation. A party that is already legally required to provide money, object, service or forbearance will not provide anything in return if it simply promises to maintain that obligation. [32] [33] [34] This legal obligation may arise from the law or from the obligation of a previous contract. Later, we will discuss what it really means to say in a contract that there is a counterparty when there is none. Entering into contractual agreements is an essential part of a successful business. Some contracts are simple like a handshake or an invoice for payment, but some high-stakes contracts and employment contracts are best reviewed by a professional. Consider talking to a business and commercial lawyer in your area to get started. You should make your consideration clauses as specific as possible in order to reduce the likelihood of a potential conflict in the future. A legally binding contract requires three main elements: an offer, a consideration and an acceptance. While the terms “offer” and “acceptance” are quite simple – an offer is made and rejected or accepted – “consideration” refers to something of value earned through the contract.

If there is no consideration for one or more parties, it casts a shadow over the legitimacy of the contract. This is a “good” consideration as it is legally permissible and good between the parties. Basically, a counterparty is established when both or more parties change positions, for example. B by promising something you are not legally obliged to do, or by advertising not to do something you are legally free to pursue. For example, a company may promise to remove a website that is confusingly similar to your company`s website, which is not required by law, in exchange for dropping your trademark infringement lawsuit against them (over which you have a right). In this scenario, each party gains something valuable – or counterpart – from the deal. Consider the uncle`s situation above. Instead, if the same uncle had made the following offer to his 13-year-old nephew before your 21st birthday: “If you don`t smoke cigarettes, drink alcohol, swear, or play cards for money before your 21st birthday, then I`ll pay you $5,000.” On the day of the nephew`s 21st birthday, he asks the uncle to pay, and this time, in the next trial, the nephew can win.

[35] Although the promise not to drink alcohol and not to gamble until the age of 21 was not a valid consideration (it was already prohibited by law), most states allow smoking at 18 and swearing, while some consider it vulgar, is not illegal at any age. Although smoking is limited by law until the age of 18, it is legal for people over the age of 18, and therefore the promise to refrain from doing so has legal value. However, the uncle would still be exempt from liability if his nephew drank alcohol, although this consideration is worthless because it has been paired with something of legal value; therefore, compliance with the entire collective agreement is necessary. .