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Consideration is a central concept in the common law of contracts and contract theory: it is value paid for a promise. Consideration is needed for a valid contract. An example; If you sign a contract with a man, agreeing to buy his car for an amount of money, his consideration is the car, which he promises to give to you. Your consideration is the money that you pay for the car. However, a contract saying that he would give you his car for nothing would not be valid per se, because you aren't giving him any consideration. In basic terms, the offeree (that is the person being offered something) must give something back to the offeror in return for his promise. There are several issues arising from, what appears to be, a quite simple doctrine. The main issues are outlined below:
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Consideration is a central concept in the common law of contracts and contract theory: it is value paid for a promise. Consideration is needed for a valid contract. An example; If you sign a contract with a man, agreeing to buy his car for an amount of money, his consideration is the car, which he promises to give to you. Your consideration is the money that you pay for the car. However, a contract saying that he would give you his car for nothing would not be valid per se, because you aren't giving him any consideration. In basic terms, the offeree (that is the person being offered something) must give something back to the offeror in return for his promise. There are several issues arising from, what appears to be, a quite simple doctrine. The main issues are outlined below:
- Of what value must the consideration be?
- Can performing an existing legal or contractual duty constitute consideration?
- Can a past-performance (also called past-consideration) be valid consideration?
- Williams v Roffey + Nicholls Ltd (1991) 1 QB 1 - a new dimension?
Of What Value Must the Consideration Be?
Consideration must be sufficient but need not be adequate. The offeree has shown consideration even if he gives something completely useless and of no value to the offerrer. This is because it acts as a token. An example of this is illustrated in the case of Chappell and Co v Nestle (1960) where it was held by the Court of Appeal that 6 chocolate bar wrappers in return for a gramophone the Nestle chocolate company was offering as part of a promotion, was valid consideration for Nestle's offer. In the case of Batsakis v. Demotsis, 226 S.W.2d 673 (1949), the Texas Court of Appeals found that the "1ere inadequacy of consideration will not void a contract" deciding that while courts generally review the legal sufficiency of the consideration they don't have to inquire into whether there was a generally fair or equivalent exchange.
A case discussed later in this article, Williams v Roffey and Nicholls Bros (1991), appears to even allow consideration to be something which is of any kind of benefit to the offerer, in this case the offerer not having to find new contractors to carry out work on the building site he was employed. Many commentators have argued over what constitutes valid consideration. Some such as Trietel argue the consideration must have some sort of economic value but other academics such as Atiyah argue that all consideration is doing is providing a reason for the offerer to put forwards his offer or promise. See Williams v Roffey below for further elaboration on this area.
Intangible Returns -
It has been held affection or lack of annoyance do not constitute consideration. In White v Bluett (1853) 23 LJ Ex 36, it was held that a son had not showed consideration for his father's promise to write-off debts owed to him by the son, if the son was to stop complaining about how the father had distributed his estate in his will.























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