Consideration In Business Law Essay

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An evaluation will be made to determine the extent to which consideration demonstrates an element of a bargain and the legal enforceability of a contract. In addition an assessment will be made on occasions where pre-existing contracts require fresh consideration.
A bargain refers to an agreement between parties and is the basis of contract formation. A legally binding contract is formed with the presence of four key elements. Namely, these are offer, acceptance, consideration and an intention to create legal relations. Should one of these elements be missing the contract is not legally enforceable.
Lacking legislative authority, consideration and the definition thereof have developed through case law. In undeveloped terms consideration refers
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Firstly, consideration needs to be sufficient but need not be adequate. The significance is that the court will not intervene with a contract because it appears ‘unfair’. However, the state does intervene with employment and consumer contracts. In order to be deemed sufficient consideration must be real, tangible and have some actual value. (Cited OU 2016c 3.1) The application of this rule is demonstrated in Thomas v Thomas [1892] 2 QB 851. It was ruled that the sum of £1 paid per annum for the ground rent on a property demonstrated sufficient consideration despite it appearing inadequate. However, consideration may also be deemed insufficient in situations where a public duty is imposed upon the claimant, or if the claimant is bound by an existing contractual duty. (Furmstone 2012 P.119). The former is demonstrated in Collins v Godefroy (1831) 1 B & AD 950. In which, a policeman summoned to court to give evidence cannot provide consideration as he is bound by law to attend.
Consideration must move from the promisee, this means the person to whom the promise was made can only enforce the contract if they themselves have provided consideration. Therefore, if the promise has moved from a third party it cannot be enforced. This rule is demonstrated in the case of Tweddle v Atkinson [1861] 121 ER 762. Whereby, Tweddle’s claim failed as he himself had not provided consideration, despite being named in the
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Stilk v Myrick [1809] 2 camp 317 demonstrates an early example of this. In this case crew members were promised extra wages for sailing home less two crew members. The captain refused to pay the wages and the crew sought a legal remedy. However, they failed, it was ruled that there was no fresh consideration for additional wages as the crew members were bound to sail home regardless. Conversely, in Hartley v Ponsoby [1857] 7e & b 872 there was a similar scenario, although, in this instance it was deemed that the shortage of labour on the vessel would have made the return journey dangerous. Therefore, fresh consideration was required as the terms had

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