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What Is the Legal Meaning of the Word Consideration

While there is no law that specifically says that a contract should contain, most researchers agree that the only statement that is really required is something along the lines of “the parties agree.” However, if there is a type of contract in which only one party signs, such as a promissory note, an option agreement or an assignment, more formal counterparty wording is appropriate. The latter corresponded well to the fashionable theories of the will of the time, particularly John Stuart Mill`s influential ideas on free will, and grafted onto the traditional requirement of customary law to justify an action for acceptance. [26] Regardless of the type of contract you enter into, you will likely hear the term “consideration.” In addition to offer and acceptance, “consideration” is one of the essential elements of a contract. But what does that really mean? An exception to this rule applies to settlements, such as agreement and satisfaction. If a creditor has a $10,000 loan against a debtor and offers to pay it for $5,000, it is still enforceable if it is accepted, even if the debtor was required by law to repay the full $10,000. Without sufficient consideration, a contract appears to be voluntary under the law. In this case, the parties would have no legal recourse if an obligation set out in the agreement was not fulfilled or given. Generally, courts do not consider whether the agreement between two parties was monetarily fair, but simply whether each party imposed a legal obligation or duty on the other party. [29] [30] The overriding issue is the existence of consideration, not the adequacy of the consideration.

The values between the counterparties provided by each Contracting Party need not be comparable. If the purpose of your contract is to promote illegal activities, it is invalid. The exact legal considerations in each insurance contract may vary. It is up to the policyholder and the insurer to determine which legal considerations are right for them. At common law, it is essential that both parties offer consideration before a contract can be considered binding. The doctrine of consideration is not relevant in many countries, although contemporary parties to a commercial dispute have considered the relationship between a promise and an act as an expression of the nature of contractual considerations. If no consideration is found, no contract is concluded. Consider the above situation of the uncle. If the same uncle had instead made his 13-year-old nephew the following offer: “If you don`t smoke cigarettes, drink alcohol, curse or play cards for money before your 21st birthday, I`ll pay you $5,000.” On the nephew`s 21st birthday, he asks the uncle to pay, and this time the nephew can win in the next trial. [35] Although the promise not to drink alcohol or gamble before the age of 21 was not a valid quid pro quo (it was already prohibited by law), most states allow smoking at 18 and swearing, while some consider vulgar not illegal at any age. Although smoking is prohibited by law until the age of 18, it is legal for people over the age of 18, and therefore the promise to abstain from it has legal value. However, the uncle would still be exempt from liability if his nephew drank alcohol, although this consideration was worthless because it was combined with something of legal value; Therefore, compliance with the entire collective agreement is necessary.

Agreement not to sue: An agreement not to take legal action against the other party if there are valid reasons. Consideration can be thought of as the notion of value offered and accepted by persons or entities entering into contracts. Anything that one party promises to the other when entering into a contract can be treated as “consideration”: for example, if A signs a contract to purchase B`s car for $5,000, A`s consideration is $5,000 and B`s consideration is the car. CONSIDERATION, contracts. An indemnity that is paid or any inconvenience caused to the party from which it comes. Or it is the reason that pushes the contractual partner to conclude the contract. 2 Bl. Com.

443. Viner defines it as a meritorious object or occasion that requires mutual compensation in fact or in law. Abr. titmouse. Consideration, A. Consideration of any kind is so absolutely necessary to enter into a good contract that a nudum pactum or agreement to do or pay for anything on one side without any compensation to the other is legally void and a person cannot be compelled to perform it. Dr. & Stud. d. 2, c. 24 3 Call, R. 439 7 Conn.

57; 1 stew. R. 51 5 Mass 301 4 John. R. 235; C. Yerg. 418; Cooke, R. 467; 6 Halst.

No. 174; 4 Munf. No. 95. But sealed contracts are valid without consideration; Or, perhaps more accurately, each loan in itself is a sufficient consideration, although none need to be mentioned. 11 Serg. & R. 107. Negotiable instruments such as bills of exchange and promissory notes bear prima facie evidence of consideration. 2 Bl. Komm. 445.

3. The consideration must be advantageous to the principal or to a third party at his instigation; or a disadvantage suffered at the instigation of the promising party by the party to whom the promise is made.