(1) According to the benefit-disadvantage theory, an appropriate consideration exists only if a promise is made in favour of the promisor or to the detriment of the promisor, which reasonably and fairly leads the promisor to make a promise for something else. For example, promises that are pure gifts are not considered enforceable because the personal satisfaction that the giver of the promise may receive from the act of generosity is generally not considered a sufficient disadvantage to warrant due consideration. 2) According to the theory of the counterpart of the exchange of negotiation, there is an appropriate consideration when a promisor makes a promise in exchange for something else. Here, the essential condition is that something has been given to the promisor to provoke the promise made. In other words, the market theory for exchange differs from the residence advantage theory in that the market theory for exchange seems to focus on the parties` motive for promises and the subjective mutual consent of the parties, whereas in the denacht-advantage theory, the emphasis seems to be on an objective legal disadvantage or advantage for the parties. For example, A works for B, who has promised to provide pension benefits to A if A works for B for 25 years. After A has been employed by B for 15 years, B informs A that the pension will now be equal to half of the amount initially promised. A may enforce the original promise under the theory of forfeiture of promissory notes, although A has not provided any consideration. A can argue that A was induced and acted on this promise. Gifts are very similar to contracts, but they are different.
Gifts require an offer, acceptance and delivery of the gift, but are generally unenforceable. If A promises to give B a birthday present, but doesn`t, B can`t enforce the promise. No consideration from B is provided. However, B is no worse off than before the commitment. From a legal point of view, if a party does not keep the promise of a gift, the parties are no worse off and, therefore, there is no cause of action. The future consideration takes place after the conclusion of the contract. For example, you order a product online that will be delivered in a week. The product is payable upon delivery. In some jurisdictions, contracts that require such nominal consideration or “peppercorn” will be maintained unless a particular contract is considered unscrupulous. In other jurisdictions, however, the court will reject “considerations” that have not actually been traded. Occasionally, courts in these countries may refer to “reasonable” or “valuable” consideration, but in reality, the court does not consider the adequacy of the consideration, but whether it has been negotiated.
The traditional idea that courts will not consider the reasonableness of consideration, an old concept of English common law, is not compatible with the doctrine of advantage and disadvantage (in which courts implicitly analyze whether the parties receive a sufficient advantage), but with the doctrine of deadweight (in which only the subjective intentions of the parties are taken into account). If one party does not provide the promised consideration, the other party may terminate the contract. The defaulting party may also be sued for damages or specific performance. Labriola, who was stripped of his rights by Pollard`s actions, sought a declaratory judgment against Pollard to declare the new agreement null and void. This type of judgment is used when a dispute has arisen, but before the damage occurs. He also claimed that Pollard awkwardly interfered in the employee`s affairs. Unfortunately, the court of first instance ruled against Labriola. Three main objectives are invoked to justify the requirement of consideration. The first is the duty of care – parties are more likely to look before jumping when they make a deal than when they make an impromptu promise of a gift. The second is the burden of proof – parties are more likely to remember a promise made as a result of a negotiation process. The third is the channeling requirement – parties are more willing to define their specific wishes coherently if they are forced to negotiate for them. Each of these justifications ensures that the contracts are concluded by serious parties and are not concluded in error.
The consideration must reflect equal value to both parties; Nominal or symbolic values are generally not considered valid. For example, most courts would not consider a dollar as sufficient consideration for a brand new Ferrari. Another case where there may not be sufficient legal value for a consideration is when someone is already legally required to do something. For example, a police officer cannot receive a reward for catching a criminal because arresting criminals is already part of his or her duties. A consideration is only valid if the service (in this case, the arrest of a criminal) is not normally required of someone. Let`s take an example. Mr. Smith has a problem with the toilet in his house.
He hires a plumber, Mrs. Jones, to fix the toilet. Ms. Jones tells Mr. Smith that it will cost him $295 to do the work. He accepts and pays her the money. Then she repairs the toilet. In this example, the $295 was a consideration for Ms. Jones, and the repair of the toilet was a consideration for Mr.
Smith. A few months later, Pollard restructured the way commissions were paid to sellers. In the previous contract, sellers had to sell at least $25,000 in print jobs to earn a commission. In the new contract, print vendors were required to sell at least $60,000 in print jobs. This increase in the sales quota, if not respected, would reduce Labriola`s revenues by 25%. The contract also required sellers to pay all attorneys` fees in the event of legal action regarding the terms of the contract. For this reason, Labriola decided to look for a job elsewhere. Certain elements must be met for the consideration to be considered sufficiently legally valid. Without this legal sufficiency, the consideration as well as the entire contract will be considered void. An exchange must be legally sufficient and negotiated between the parties for a contract to be considered a valid consideration. An agreement between private parties that creates legally enforceable mutual obligations. The basic elements required for the agreement to be a legally binding contract are: mutual consent, expressed by a valid offer and acceptance; reasonable consideration; Capacity; and legality.
In some States, the consideration element may be met by a valid substitute. The remedies available in the event of breach of contract are general damages, consequential damages, damages of trust and certain services. The existence of consideration distinguishes a contract from a gift. A gift is a voluntary and free transfer of property from one person to another without promising anything of value in return. Failure to keep a promise to make a gift is not enforceable as a breach of contract because there is no consideration for the promise.