Contract & Agency Law

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Payment, similar to consideration, is one of the four elements of a contract. Consideration is something of value in a contract or agreement between two parties. Both parties must be providing something of value to the other party. It is an act or promise to do (or not to do) something in return for value and the value given is enforceable. All the law need is ‘valuable consideration'. For example, if Jack has offered to pay S$10 for a hammer worth S$100, that is considered valuable consideration. There are three types of consideration in law: executory consideration, executed consideration and past consideration.

In this case study, the agreement of payment between Food Enterprises Ltd and Nerd Private Ltd, clause 2.2 indicates that invoices are to be paid within ten days (10) of receipt of invoices submitted by Nerd Private Ltd. The client (Food Enterprise Ltd) shall pay the consultant (Nerd Private Ltd).

Executory consideration is when a promise, yet to be performed, is given in exchange for another’s promise. Executed consideration is when an act has been performed in exchange of another’s promise. Past consideration refers to an act performed prior to or independent of the promises being exchanged.
In this case study, the payment services and expenses in the Service Terms and Conditions are both executory and executed. The agreement of payment between Food Enterprises Ltd and Nerd Private Ltd, clause 2.2 indicates that the invoices payable within ten (10) days of receipt of invoices submitted by consultant unless otherwise agreed in the Appendix. This means that the consultant has performed their promise; thus the consideration is executed, and the client has yet to perform their promise, hence, it is still executory.

In consideration, it must move from the promise but not necessarily go to the promisor. Consideration also need not be adequate but must be sufficient.

Rules of consideration
1.Consideration must be referable to the promise
2.Consideration must move from the promise
3.Consideration need not be adequate but must be sufficient, or of equal value 4.Consideration must not be illusory
5.Consideration must be current
6.Performance of an existing obligation under a contract owed to the promisor is not consideration for a promise 7.Part payment of a dept is not consideration for a promise to discharge the whole sum 8.Performance of a public law duty is not consideration for a promise 9.Performance of a contractual obligation owed to a third party is a good consideration.

(b) Proprietary items and confidential information (10 marks)

The word "proprietary" indicates that a party, or proprietor, exercises private ownership, control or use over an item of property, usually to the exclusion of other parties.

In this case study proprietary items refer to the Consultant Knowledge Capital. As stated in Clause 4.1(d) in the Service Terms and Conditions, the term Consultant Knowledge Capital refers to the Materials existing prior to commencement of the Services, or developed outside the scope of the Services, that are together with any enhancements and/or modifications thereto, whether or not such enhancements and/or modifications are developed as part of the Services. In Clause 5, the client shall have or obtain no rights in any Consultant Knowledge Capital other than the four stated exceptions.

This may cause the restriction, restraint of trade. It is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business.

In a business, the buyer refrains from seeing its assets being diminished by the seller’s post-completion activities. If the seller was able to lure all his previous clients away from the buyer then the buyer is left with a worthless asset. A buyer will hence consider the insertion of restraint clauses which consolidate the business’s commercial assets.

Confidential information is information that is...
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