Introduction to Business Law
Assessment 1: Individual Assignment
Question 1
(a) Consideration is one of the four main elements to be present in order to have a legally binding contract. Consideration can be anything of value (such as an item) which each party must agree to exchange for the contract to be valid. For consideration to be sufficient, both parties have to have an agreement. If only one party agrees to it, then the agreement is not consider a legally binding contract. Something must be given or promise in exchange for the promise.
Consideration must be sufficient but it need not be adequate to form a contract. The courts will not measure the adequacy of the consideration as it is up to the parties to decide the value of the promises made. Courts would not interfere into the adequacy of consideration so long as there are some. The reason for this rule is to have a freedom of contract, which required that the parties themselves should be allowed to make bargains that suit them without interference from courts.
As long as both parties agree to it, then it is sufficient.
Example: I promise to give you my necklace, but you did not give me anything in return. And if I break my promise and keep my necklace, you cannot go to court and make me give it to you. The contract is not legally binding as you did not give me any consideration for my promise.
The above-mentioned is being supported in the case of Chappell v Nestle, where A offers B a book which is of some value, consideration takes place.
(b) An offer is a willingness to be bound to a contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person. The party making an offer to another party is called the offeror. The offeree is party to whom the offer is made.
The above-mentioned is being supported in the case of Preston Corporation Sdn Bhd v Edward Leong, where the offeror made an offer to the offeree to enter into a legally binding contract.
An
Question 1
(a) Consideration is one of the four main elements to be present in order to have a legally binding contract. Consideration can be anything of value (such as an item) which each party must agree to exchange for the contract to be valid. For consideration to be sufficient, both parties have to have an agreement. If only one party agrees to it, then the agreement is not consider a legally binding contract. Something must be given or promise in exchange for the promise.
Consideration must be sufficient but it need not be adequate to form a contract. The courts will not measure the adequacy of the consideration as it is up to the parties to decide the value of the promises made. Courts would not interfere into the adequacy of consideration so long as there are some. The reason for this rule is to have a freedom of contract, which required that the parties themselves should be allowed to make bargains that suit them without interference from courts.
As long as both parties agree to it, then it is sufficient.
Example: I promise to give you my necklace, but you did not give me anything in return. And if I break my promise and keep my necklace, you cannot go to court and make me give it to you. The contract is not legally binding as you did not give me any consideration for my promise.
The above-mentioned is being supported in the case of Chappell v Nestle, where A offers B a book which is of some value, consideration takes place.
(b) An offer is a willingness to be bound to a contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person. The party making an offer to another party is called the offeror. The offeree is party to whom the offer is made.
The above-mentioned is being supported in the case of Preston Corporation Sdn Bhd v Edward Leong, where the offeror made an offer to the offeree to enter into a legally binding contract.
An