Essays on Consideration in Business Law Essay

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The paper 'Consideration in Business Law' is a good example of a Business Essay. The contract can be defined as a legal binding agreement between two or more parties and it must have offer and consideration. Offer is the item being given out by the promisor and the promisee gives consideration. Basically consideration is the bargaining price of a contract in an exchange of an item (Heffey, et al, 2004). Consideration can also be a gift given to one party of a contract since the law of contract is based on the promises where each party of the contract must get benefits of the contract, this benefit or the detriments is what is referred to as consideration (Heffey, et al, 2004).

Consideration must be something of value, in the case of Thomas vs. Thomas (1842), whereby a widow brought in a case against her husband’ s executor. The husband had promised her that she will have one house for life. After the death, the executor promised to give a life interest in one of the houses which were in consideration of John’ s desire but later the executor changed and refused to convey the house completely (Heffey, et al, 2004).

In his decision, CJ Denman held that the provision for the payment and obligation which she undertook to repair the building was an express agreement and was sufficient enough to for consideration for any contract and the moral feelings and motivation which a companied the arrangement is irrelevant while in his decision Petteson quoted that consideration must be of value and must have detriment and benefit (J Adams, 1990). Law of consideration is being governed by several rules and regulations, these include; Any consideration must be present and not past for it to be valid Any consideration doesn’ t need to be adequate but must be sufficient to support the claim Always consideration must come from the promise in exchange for the promise or gift Any existing and compulsory public duty should and will not amount to any valid consideration t Any existing contractual obligation does not amount to valid consideration Payment of debt for a promise forego is not a valid consideration Law of consideration originates from the civil law of intention to protect people who entered into the contract. Discuss the law on the adequacy of consideration Adequacy of consideration does not make a contract valid in any way but consideration must be of value in the eye of the law.

But in equity, if consideration is inadequate, then it is evidence of fraud and can act as a base of refusing specific performance. If consideration is not adequate, then it is regarded as corroborative evidence more so in a suit for relief from any kind of contract and can be used against a party as a fraud and undue influence (J Adams, 1990).

Consideration must be sufficient but adequate, these include; Having value In most cases, the court is less concerned with the adequacy of the consideration of the contract. In situations where there is no undue influence and duress, the court will always uphold contracts even in situations where the consideration does not appear adequate. In the case of Chappell and Co Vs, Nestle of 1960 Nestle offered one of the most popular records of the time in exchange of 1/6d and some other three wrappers in their bars of chocolate.

In their decision, the judges held that though the wrappers had very little direct value, they were good consideration even though they were thrown away (Heffey, et al, 2004). In consideration, there must be some economic value of a promise though the value itself is not precisely quantified. Most courts in various cases have not been quite a consistency in their definition of value or the benefit of consideration in the case of Stilk vs. Myrick of 1809, the judges held that even though the promisor received huge benefits, consideration was not sufficient enough (Seddon et al, 2010). There must be a benefit to promisor and detriment to promise in consideration, though the benefits and detriment are not quantifiable and one can find that even minimal consideration can be given valuable promises.

It is impossible for consideration to consist of emotional value or sentimental only but it must have some economic value or material value (Seddon et al, 2010). Discuss the law on the sufficiency of consideration In the case of White vs. Bluett of 1853, natural love and affection are not sufficient for consideration, here a son gave his father a promise not to bore him in the distribution of property and the judges held that it was not a good consideration and not sufficient (Seddon et al, 2010). In the case of Cook vs.

Wright, plaintiff honestly believed that the defendant was obliged statutorily to reimburse them the money for the incurred expenditure, after denying such claims, the defendant went ahead and paid some reduced amount in order for him to avoid litigation.

After the defendant has realized that he was not under any statutory obligation, he refused to pay and argue that the promise was not actually supported by any consideration. In their decision, judges held hat his decision was actually supported by consideration and he must pay the agreed amount as agreed (Heffey, et al, 2004). In the case of Williams’ s v Roffey, the contractor who entered into the contract of a flat refurbishment which was later subcontracted to carpentry works. The plaintiff received interim payment after performing some work, the plaintiff entered into some financial problems due to his under-pricing of the contract work, the defendant disrupted the work and subcontracted another contractor after realizing this in order to avoid some penalties, though the plaintiff went ahead and sued for additional money (Heffey, et al, 2004).

The court held that the subsidiary agreement was enforceable by law. This case has been applied recently in Australian   In the case of Stilk v Myrick of 1908, it gives information on the task which exist within a duty, and here the plaintiff who was an employee as a seaman, two of the crew deserted him on the way to London, the captain could not manage to replace the crew and the remaining decided to travel back to London and share the wages of the others who escaped (Heffey, et al, 2004).

The extra cash was not paid to them on a rival and then they sued their master. The court held that the remaining crews were not at liberty to quit simply because the others quitted and they were not entitled to any other additional payment since they had taken an agreement to perform what they had done (Brian, 2010) In the other case of Hartley v Ponsonby of 1857, in this case, the plaintiff was a seaman who was sailing to Bombay from the United Kingdom, the defendant promised in writing to pay the plaintiff $40 in assisting him in sailing, the defendant refused to pay the extra money for carrying and was sued.   It was held that the plaintiff was not working under undue influence and agreed to do so, (Brian, 2010). All these cases are still applicable in Australia in deciding cases.

One of the most current cases where all the three cases have been applied in the case of Musumeci v Windadell Pty Ltd, in this case, Charles and Margaret Musumeci made a lease contract for a building in a shopping center, they claimed that terms and conditions of that contract had been adversely varied and the cost due was actually two-thirds of the actual cost. They cited the case of Williams’   v Roffey as one similar case. The plaintiff and tried hard and overcome the arguments in Stilk v Myrick's case of fulfilling the existing obligation.

In the other case, judges argued that Roffey's principle of the decision could not be extended in Foakes vs. Beer's situation unless such principles and decisions are reached by the house of Lord and in the parliament (Heffey, et al, 2004).   Santow also suggested that Australian courts should follow Roffey and regard practical benefits as good consideration (Heffey, et al, 2004). Some of the principles of Williams’ s v Roffey  case which are still applicable in the Australian courts today includes a situation where  (A) has a contract with the person( B) to provide goods or services and  (B), before completion has reason to doubt that A can or will be for sure complete the bargain.   (B) Then promises or give consideration (A) some additional consideration in return for A’ s promises to perform his obligations (Brian, 2010). I personally agree with the decided cases which have been given in the courts of Australia as relevant and valid.

The contract must have consideration and the consideration must be sufficient as opposed to being adequate.

The sufficiency of the consideration needs to be quantified and the definitions of the value need to be standardized and consistency needs to be considered.


Brian Coote (2010) Contract as Assumption: Essays on a Theme (Hart Publishing, Oxford)

Heffey P, Paterson J & Roberston A, (2004) “Principles of Contract Law”

J Adams, R Brownsword - The Modern Law Review, (1990) -Contract, Consideration and the Critical Path, Wiley Online Library

Seddon, N; Bigwood, R; Ellinghaus, M, Cheshire & Fifoot (2010) Law of Contract, 10th Australian Edition

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