In the legal system, the term consideration in contract law refers to something of value given to someone in return for goods , services , or some other promise. A valid contract must include consideration for every party involved. In simple terms, consideration is the basic reason a party enters into a legal contract. To explore this concept, consider the following consideration definition. See full list on legaldictionary.
Something of value given in exchange for something else of value , usually in the context of a contract. In order for a contract or agreement to be legally binding, every party to the contract must receive some type of consideration. In other words, a contract is a two-way street, so each party must receive something of value from the other party or parties. If one or more of these elements are missing, the contract lacks the necessary requirements, it could potentially be deemed invalid by the court. The required elements of consideration include: 1. The contract must include a bargain for the terms of the exchange.
This means there must be something that is worth bargaining over to both the parties. There must be a mutua. Most often, services or goods are exchanged or promised in a contract, though consideration may be whatever the parties agree to.
A contract may be deemed invalid by a court if it lacks recognizable consideration. Consideration in a contract is the exchange of anything of value by each party. Although the exchange of certain items or terms may seem like something valid on which to create a contract, not just anything meets the definition of consideration. Some of the scenarios where a contract lacks consideration includes: 1. The agreement is more of a promise of a gift, rather than a contract 2. One of the parties involved was already legally obligated to perform as specified by the contract 3. Damages – A monetary award in compensation for a financial loss, loss of or damage to personal or real property, or an injury. Obligation – A promise or con.
In English law consideration May be present or future, but not past. Common types of consideration include real or personal property , a return promise , some act , or a forbearance. When something is done or suffered before.
It may inhere some benefit, right or interest , to be received by the promisor, or loss, detriment, or obligation causing to the promisee. It is the base of a contract. The law enforces only those promises that are made for consideration.
An agreement without consideration subject to certain exception is void. In the absence of consideration, a promise is purely gratuitous and creates no legal obligation. The term consideration is used in the sense of quid proquo (Something in return). Thus, consideration is the price for which the promise of other is bought.
If there is no consideration in an agreement, it is not enforceable by law except in certain cases. As a matter of fact, consideration is the very life and blood of every contract. Sometimes this change in position is also called a bargained-for detriment. Executory consideration is something given or accepted in return for promise where the promise act remains to be performed on a future day. Executed consideration is something given or accepted in return for promise where the promise act has already been performed.
Past consideration is a past promise or act which forms the basis of a future promise. The term “consideration” is a concept in English law that refers to the price paid in exchange for the fulfillment of a promise. Its main characteristic is that the promissor must give a promise of something that is of value, and the promisee must give something of value in exchange. In a contract for the sale of goods, the money paid is the consideration for the vendor, and the property sold is the consideration for the purchaser.
This definition, however, leaves unanswered the question of what is sufficient consideration. Although all three types of consideration are valid under Indian law, English contract law does not recognize past consideration. The concept has been adopted by other common law jurisdictions. The legal definition of consideration is based on the concept of a “bargained-for exchange.
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