Contract Law

To be considered legally binding and enforceable contract an agreement must have legal
intention backed by sufficient consideration to form an obligation.to the contract made by deed
the demand of meeting a consideration is not applicable. The presence of an agreement doesn’t
state the fact that a contract is made, the contract is formed between 2 parties, promisor is one of
the parties, by whom the promises are made, party/promiseee to whom the promise is made is the
counterparty, the consideration must be given in order to make the contract legally binding.
Services to be provided in the future or a monetary payment promise is equal in consideration as
the actual rendering of services or the payment. In order to turn a naked promise created in his
favour into a contract that is binding, something must be provided by the promisee in return for
the promise of promisor.
In the case of Currie V Misa, Judge Lush gave an authoritative definition of Consideration, He
stated: “A valuable consideration, in the sense of law, may consist of either in some right, an
interest or benefit accruing to one party or some forbearance or detriment suffered or undertaken
by other party, The definition provided by Sir Frederick Pollock of consideration was further
validated by in Case Dunlop V Selfridge Ltd by Lord Dunedin, in which he stated:
“An act of forbearance of one party, or the promise thereof, is the price for which the promise of
the other is bought, and the promise is thus given for value is enforceable."
There are 5 major rules that hold sway over consideration:
First:
The “Consideration must not be passed” this means that if a voluntary act is committed by one
party and a promise made by the other party, the consideration of promise has now moved in the
past. The rules hold that past consideration is not considered as consideration, thus is holds no
validity and in situation of sue on a contract past consideration can’t be used. [ReMcArdie]
However, in if certain requirements are met, a promise made for past consideration will become
binding: Act is lawful in nature: Work is done at promisor’s desire; for the work done a payment
as expected. [ Pao On]
Second: “Consideration must move from the promiser “in order to enforce the contract proof that
consideration was provided must be shown by the person who wishes to enforce the contract. It
is not sufficient to show that consideration is provided by another person. It must be shown by
the promisee that the consideration moved (i.e, was provided by) him. [Tweddle Atkinson]. The
consideration doesn’t have to move to the promisor. Problems may arise if three parties are
involved. [Combe V Combe]
Third: “Consideration must be sufficient but need not to adequate”, thee adequacy will not be
scrutinized by the courts as just giving consideration has value. Law recognizes consideration
having some value, it is referred as “real” or “sufficient” consideration. No contracts will be will
be scrutinized by the courts if equal value is provided to the parties,[ Chappell & Co Ltd V
Nestle Co Ltd].