The consideration is one of the six elements that make up a legally binding contract. It is something of value that is given in exchange for something else of value. A common example of consideration is money given in exchange for goods or services. In other words, the consideration is what you get out of a contract. To be valid, the consideration must have the following: An exception to this rule exists when there is an obligation to a third party. An act taken before making a promise to make a payment or to grant any other benefit can sometimes be the counterpart of the promise. For this to be true, three conditions must be met (Pao On v Lau Yiu Long [1980]): The performance of the contract must be at the will of the promisor and not at the will of a third party. The promisor does not always have to benefit from the consideration; It could also be intended for third parties. The bottom line is that there must be a connection between the desire of the promisor and the action of the promise. Another factor to note here is that what is done as part of the consideration is not voluntary, but at the request of the promisor. For example, if A`s house burns down and B rushes to save it on his own, that`s not a consideration. But if A asks B to do so, then it is considered a quid pro quo.
The disadvantages of a contract are something that one party gives up in exchange for the consideration of the other party. For example, if a person buys a car from a dealership, the money paid for the car is the person`s disadvantage. One of the essential elements of a valid contract is that it must be backed by a counterparty. The term counterparty is used in the sense of counterparty. This means that if a party promises to make a deal to do something, they must get something in return. Something that one party gets in return is the quid pro quo. Simply put, consideration is what a promise demands as the price of his promise. Article 2 (d) defines consideration as follows: If, at the request of the promisor, the promisor or another person has done or omitted or omitted or promises to do or abstain from doing something, that act, abstinence or promise shall be called consideration for the promise. Let us explain in detail the essential elements of the consideration.
For consideration to be considered valid, two elements must be met: certain elements must be fulfilled for the consideration to be considered legally sufficiently valuable. Without this legal sufficiency, the consideration as well as the entire contract will be considered void. In the case of Williams and Roffey Bros, Roffey Bros commissioned Williams to do carpentry for £20,000 on a block of 27 apartments they had been commissioned to renovate, but he was unable to finish in time because the price he quoted was not enough to complete the work. Consequently, Roffey Bro offered to increase wages by £10,300 if the work was completed on time; However, after Williams completed eight of the apartments, Roffey Bros. did not pay the additional costs, prompting Williams to file a lawsuit for the additional payment. It is argued that Roffey Bros. did not consider Williams and that the case was decided in his favour. Arguably, the reason why the case was decided in this way was due to the fact that Williams continued to work and therefore did not breach his contract. In addition, Roffey Bros. did not have to look for another subcontract, which saved them time and money, and finally, when the work was completed, they did not incur any penalty for late completion of the work. Williams v. Roffey led to the introduction of the practical utility test, which was not previously considered a good consideration, due to the fact that Glidewell, LJ, when making his final statement, focused on whether or not “in practice” the promise received benefits, rather than whether the promisor was disadvantaged because of his promise or whether the prominsor received a “legal benefit”.
Moreover, the declaration also implies that this decision would have the effect of “abolishing the doctrine of consideration”. Therefore, the principle of this case between Stilk v. Myrick, many have had to argue that Stilk v. Myrick is incompatible with Williams v. Roffey, because it was considered obsolete by the courts. This departure from Stilk v. Myrick shows how the decision in Williams v. Roffey challenged traditional rules of consideration, such as the already existing customs principle, and established a new path that the rule of consideration could take. In his statement, however, Chief Justice Glidewell made it clear that his intention was not “to go against the principle set out in Stilk v.
Myrick”, but to refine and limit the application of this principle, but let them leave the principle intact. This shows that, although Williams v. Roffey caused much controversy over the rules of consideration, but this was not the intention of Glidewell LJ, it can be argued that he tried to modernize the rule so that it relates to today`s society, moreover, his intention was perhaps to gather the rules of consideration to prevent the constant avoidance of the Stilk v. Myrick principle. It can be seen that, in a way, the decision succeeded in setting a new precedent; However, it also received a lot of criticism. Contracts in which a legally worthless clause is accompanied by a legally binding clause are in principle always enforceable. The consideration can pass from a promise to another person. This characteristic simply indicates that there may be a foreigner, but there may be no foreigner for the contract. If the promise and consideration take place simultaneously, it is present or executed consideration. For example, Peter walks into a store, buys a bag of chips and pays locally. If A signs a contract with B so that A cancels B`s house for $500, A`s consideration is the painting service of B`s house, and B`s consideration is $500 paid to A. If A signs a contract with B not to repaint his own house in a color other than white, and B pays A $500 a year to maintain that agreement, there is also a consideration.
Although A promised nothing to do, A promised to do nothing he was allowed to do, and so A`s consideration for B is the indulgence of painting his own house in a color other than white, and B`s consideration for A is $500 a year. Conversely, if A signs a contract to buy a car from B for $0, B`s consideration is still the car, but A gives no consideration, and therefore there is no valid contract. However, if B still transfers 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 value of the exchange must be legally sufficient. This means, among other things, that the consideration of each party must be of equal value. In our example, the $295 fee and the work done to repair the toilet were about the same, so the consideration is legally sufficient and the contract is valid. The consideration must also be negotiated. This means that both parties must agree to give up something as part of the contract.
In our example, Mr. Smith forfeited $295 and Ms. Jones donated her time and expertise in plumbing. Past consideration – If the promise or deed is fulfilled before the contract is concluded, it is considered a prior consideration and applies under Indian law.