What Is the Definition of Consideration in Contract Law

Regardless of the type of contract you sign, you`ll likely hear the term ”consideration.” In addition to the offer and acceptance, ”consideration” is one of the essential elements of a contract. But what does this really mean? Suppose A is a film screenwriter and B runs a film production company. A said to B, ”Buy my script.” B says, ”How about that – I`m going to pay you $5,000 so your film won`t be produced for another year. If I produce your film this year, I will give you $50,000 more, and no one else will be able to produce it. If I don`t produce your film this year, then you can leave. If the two subsequently come into conflict, the question of whether a contract exists is answered. B had an option contract – he could decide if he wanted to produce the script or not. B`s counterpart was the downward amount of $5,000 and the possibility of $50,000. A`s counterpart was the exclusive rights to the film script for at least one year.

There are a number of common questions about whether there is consideration in a contract: if a legal contract does not contain considerations, a court can intervene and declare the contract unenforceable. This can happen: at common law, it is necessary for both parties to offer consideration before a contract can be considered binding. The doctrine of consideration is not relevant in many jurisdictions, although current business relationships have viewed 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. Although we have tried to present the basics of consideration in contracts here, it can be very complex. It is not enough to add the word ”consideration” to your contract to make it enforceable. For example, many contracts usually have a recital at the beginning, which states that the contract is ”for a good and valuable consideration.” Unless there is clear evidence of this consideration in the contract, this statement is unnecessary. If A signs a contract with B so that A cancels B`s house for $500, A`s consideration is the service of painting B`s house, and B`s consideration is $500 paid to A. If A signs a contract with B so that A does not repaint his own house in a color other than white and B A pays $500 a year to maintain that agreement, there is also a consideration.

Although A did not promise to do anything in the affirmative, A promised not to do something he was allowed to do, and so A was considered. The consideration of A for B is the tolerance of painting one`s own house in a color other than white, and the consideration of B for A is $500 per year. Conversely, if A signs a contract to buy a car from B for $0, B is still the car, but A does not give any attention, and so there is no valid contract. However, if B still gives ownership of the car to A, B cannot take back the car because, although it is not a valid contract, it is a valid gift. The same applies if the consideration is a service for which the parties had previously concluded a contract. For example, A agrees to cancel B`s house for $500, but halfway through work, A B says he won`t be ready unless B increases the payment to $750. If B agrees and A then leaves the job, B A still only has to pay the $500 originally agreed, as A was already contractually obligated to cancel the house for that amount. If a court decides that the consideration in a contract is abusive or non-existent, the contract usually collapses. This is often a sign that one party has tried to deceive the other party, making the agreement unfair or unfair. Long court cases and writings abound on the subject, which is a consideration. In short, there are two other important things to know. First, the consideration does not have to be money.

It can be something of value, so it can be another object or service. The reason why both exist in common law jurisdictions is considered by leading scholars to be the result of the combination of two different sons by 19th century judges: First, the requirement of consideration was at the heart of the action of Assumpsit, who had grown up in the Middle Ages and remained the normal trial for breach of a simple treaty in England and Wales. until 1884, the old forms of action were abolished; Second, the notion of agreement between two or more parties as the essential legal and moral basis of the treaty was promoted in all legal systems by the 18th century French writer Pothier in his Traité des Obligations, which (especially after the English translation in 1805) was widely read by English judges and jurists. .