Consideration
Introduction
Consideration is one of the essential elements for a formation of a contract.1 According to Lord Pollock’s definition of consideration which is an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought and the promise thus given for value is enforceable.2 Besides that, consideration must be something of value given or promised in exchange for the promise given by the other party in order for a valid contract to be formed.3 The term “something of value” can be defined as a payment, an act or services, an object or giving up legal right. There are certain rules of consideration that have been established in the precedent case. The first rule of consideration is it will only exist when a contract is to be enforceable.4 Secondly, a good consideration can be done in the present and future but not the past.5 A consideration can be done even though the promisor has no knowledge of it.6 The fourth rule of consideration is it does not have to be adequate or commercially realistic.7 Also, consideration must be tangible and cannot be too vague.8 Lastly, consideration must be legally sufficient in the eye of the law.9 The objective of this research essay is to discuss and explain the rule of the consideration which is consideration does not have to be adequate or commercially realistic but it has to be sufficient and how these legal concepts relate to the cases. Thus, this research essay also discusses whether Australia contract law should provide greater clarity about what is sufficient consideration.
Consideration can be Nominal It is one of the rules of consideration where consideration does not have to be adequate or commercially realistic.10 This rule simply means that the price in return does not have to be right.11 Thus, court will not look into whether the price is adequate or not, as long as some price is paid, the court will not look further about it. Even though it is a very low price or a
Consideration is one of the essential elements for a formation of a contract.1 According to Lord Pollock’s definition of consideration which is an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought and the promise thus given for value is enforceable.2 Besides that, consideration must be something of value given or promised in exchange for the promise given by the other party in order for a valid contract to be formed.3 The term “something of value” can be defined as a payment, an act or services, an object or giving up legal right. There are certain rules of consideration that have been established in the precedent case. The first rule of consideration is it will only exist when a contract is to be enforceable.4 Secondly, a good consideration can be done in the present and future but not the past.5 A consideration can be done even though the promisor has no knowledge of it.6 The fourth rule of consideration is it does not have to be adequate or commercially realistic.7 Also, consideration must be tangible and cannot be too vague.8 Lastly, consideration must be legally sufficient in the eye of the law.9 The objective of this research essay is to discuss and explain the rule of the consideration which is consideration does not have to be adequate or commercially realistic but it has to be sufficient and how these legal concepts relate to the cases. Thus, this research essay also discusses whether Australia contract law should provide greater clarity about what is sufficient consideration.
Consideration can be Nominal It is one of the rules of consideration where consideration does not have to be adequate or commercially realistic.10 This rule simply means that the price in return does not have to be right.11 Thus, court will not look into whether the price is adequate or not, as long as some price is paid, the court will not look further about it. Even though it is a very low price or a