A contract may be defined as an agreement between two or more parties that is intended to be legally binding. The first mandatory requisite of any contract is an agreement (consisting of an offer and acceptance). At least two parties are required; one of them, the offeror, makes an offer which the other, the offeree, accepts.1 A contract may be defined as a legally binding agreement or, in the words of Sir Frederick Pollock: "A promise or set of promises which the law will enforce".
The agreement will create rights and obligations that may be enforced in the courts. The normal procedure of enforcement is an action for damages for breach of contract, though in some cases the court may order performance by the party in default.2 Contracts may be divided into two broad classes:
1. Contracts by deed
2. Simple contracts
The essential elements of a contract are:
Intention to create legal relations
Therefore, a contract which possesses all these requirements is said to be legitimate. The absence of an essential element will render the contract void, voidable or unenforceable In contract law consideration is concerned with the bargain of the contract. A contract is based on an exchange of promises. Each party to a contract must be both a promisor and a promisee. They must each receive a benefit and each suffers a detriment. This benefit or detriment is referred to as consideration. Lush J. in the case of Currie v Misa referred to consideration as consisting of a detriment to the promisee or a benefit to the promisor: "Some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other."3 Rules Governing Consideration4
1. The consideration must not be past.
2. The consideration must be sufficient but need not be adequate. 3. The consideration must move from the promisee.
4. An existing public duty will not amount to valid consideration. 5. An existing contractual duty will not amount to valid consideration. 6. Part payment of a debt is not valid consideration for a promise to forego the balance. Therefore, the doctrine of consideration requires that something must be given in return for a promise in order to make contract binding. A contract may involve exchange of money for goods and may also involve exchange of promises. When a contract is made by an exchange of promises, each party’s promise provides consideration to support the promise made by other.5 Critical analysis of the situations in which an agreement without consideration can be enforced and their justifications Consideration is a focal concept in the common law of contracts and contract theory. Under basic doctrines of contract law, consideration is the answer to the question, "Why are you entering this contract?" or "What are you receiving for being a party to this contract?" In order for any agreement to be deemed legally binding, it must include consideration on the part of every person or company that enters the contract. In Stilk v Myrick case, the claimant was a seaman on a voyage from London to the Baltic and back. He was to be paid £5 per month. During the voyage two of the 12 crew deserted. The captain promised the remaining crew members that if they worked the ship undermanned as it was back to London he would divide the wages due to the deserters between them. The claimant agreed. The captain never made the extra payment promised. Held: The claimant was under an existing duty to work the ship back to London and undertook to submit to all the emergencies that entailed. Therefore he had not provided any consideration for the promise for extra money. Consequently he was entitled to nothing.6 The above case indicates that consideration is one of the basic elements to support a contract to be enforceable. However, there are situations when consideration is not required in the...
Bibliography: Turner Clive, Australian Mercantile Law (The Lawbook Company Limited, 7th ed, 1985)
Central London Property Trust Ltd v High Trees House Ltd  1 KB 130
Combe v Combe  2 KB 215
Currie v Misa (1875) LR 10 Exch 153
Legione v Hateley (1983) 152 CLR 406
Stilk v Myrick, 1809 2 Camp 317
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Contract Law, Studymode.com, Contract Law, 2012, , viewed 8th June 2014
D Gamage, ‘Berkeley Law’, Commodification and Contract Formation: Placing the Consideration Doctrine on Stronger Foundation, 2006, available from http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=2461&context=facpubs, viewed 1st July, 2014.
Providing resources for studying law, contract consideration, E-lawresources.co.uk, < http://www.e-lawresources.co.uk/Consideration.php, viewed 25th June 2014.
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