Tag: Laws

Essay on the Consideration in Contract Law; What does mean consideration? They have many different meanings; some will tell you it means calculations while some say it signifies affability. But in the law of contract, there will be only one definition that exists. What do the Means of Racial Profiling? Somewhat of worthy changes hands between the parties at the time of the contractual undertake is what ‘consideration’ only means in the law of contract.

Here is the article to explain, It is define the Consideration in Contract Law!

Consideration plays an essential role to create a contract binding. It is also a part of a must element to a successful contract formation, followed by the offer and the acceptance. For example, it could be the payment of cash when there is an exchange for goods or services, or else the goods or services themselves in the case of a trade deal. The main point is consideration is it ought to be related to something valuable, something one party would not normally have but merely for the agreement.

‘Although consideration has withstood direct assault from both the bench and from law reformers over the years; its Holdworthian image as an anachronistic doctrine tried to the law of actions long since dispensed with, has proved impossible to entirely shake off. However, the function of consideration as an arbiter of agreements to vary long-standing arrangements has also existed challenged by the development of alternative doctrines such as duress and promissory estoppels. In overturning almost two hundred years of legal history, the Court of Appeal held that an agreement to vary a contract is enforceable without consideration.

What are the types of consideration approaches?

The following consideration approach is two types Traditional and Modern below are;

Traditional approach;

Two rules existed under the word ‘consideration’ in the law. There are the traditional approach and the modern approach. The traditional approach is an ‘existing duty’ which is a very direct rule; as it stands concerned merely with the completion of a duty that exists stated on a contract. Dealing with the “existing duty” rule, if a party is already under a duty to perform an act, according to an existing contract, to promise to perform this act on behalf of the same person will not support a new contract between them. The above rule existed found in the case of Stilk v Myrick. The mentioned case is about a seaman named Stilk who wanted to sue his ship’s captain for not recovering his additional wages which existed promised at an earlier stage.

The promises stood taken when two sailors had deserted in a foreign port and the captain wanted his remaining crew to work the ship back to London. Unfortunately, Stilk’s claim stood unsuccessful under the ‘existing duty’ rule; as it existed argued that Stilk had not done anything further according to his original stated contract. While in the case of Hartley v Ponsonby which is related to the ‘existing duty rule; it stood about a seaman named Hartley who sued his master for reneging his promise of paying him 40 pounds added to his wages. The promise stood made to induce those remaining crews to sail when seventeen out of thirty-six workers refused to work and ended up in prison. Hartley’s claim was successful as he did do things extra beyond his original contract which didn’t mention.

Modern approach;

For the modern approach as a ‘commercial realistic’ rule; it existed known as a duty which consider logically; concerned about the additional risk, beyond what exists already stated in the original contract. In the case of William v Roffey Bros & Nicholls, the facts stood the carpenter worked on a series of flat renovations; which stood subcontracted by the plaintiff and existed agreed to exist paid 20000 pounds for the workmanship. And, with an additional of 575 pounds for completion of each unit of the flat; when the carpenter got into financial difficulty then intended to stop the renovations.

It stood held that the plaintiff has the right to own the additional wages due to the ‘commercial realistic’ rule. ‘Practical benefit’ became a good role on consideration as the defendant had avoided both obstacles; which were the penalty of late completion and troublesome in engaging another carpenter to continue the renovations.

Other things;

Thus, it can seem that both parties did contribute and received practical benefits. Next, comes the case of Musumeci v Wendell, in this case, a landlord named Winadell who operates a shopping center leased a fruit shop to Musumeci, on the other hand, leased another part of the shopping center to a large fruit retailer.

This had caused Musumeci to face a strong competence hence Winadell agreed as a ‘concession’ to reduce their rent by a third. But at a later stage, Wendell intended to evict the Musumeci. Hence, turn up to bring up the case to the court to determine if the reduction rent was contractually binding. After the dispute, it stood judged that the promise was binding by applying the ‘practical benefit’ test from the case of Williams v Roffey Bros & Nicholls. This can see as Winadell received ‘practical benefit’ by having a maintained fully let shopping center in exchange for reducing Musumeci’s rental fees. In a nutshell, the main component of this rule is when there are practical benefits and contribution exists between parties, a contract follows to exist.

History of modern approach;

In the case of William v Roffey Bros & Nicholls, ‘commercial realistic’ existed involved. The decision made in this case existed driven by a pragmatic approach to consider but universal approval has not existed greeted. It was first designed to gain what the court regarded as the commercially acceptable solution. The fact, in this case, was Glidewell LJ was the knowledge that in return for the additional payment the main contractors intended to avoid those obstacles. Therefore, ‘practical benefit’ did exist criticized for hopelessly compromising the doctrine of consideration’. Nevertheless, this rule was more to the public’s support; as it concerns more on an individual’s benefits logically compare to the ‘existing duty rule.

To have a better description of the above rule, I would take an example of the case mentioned in the ‘existing duty rule in addition to the promoters working overtime to reach the target of selling off at least 50 stocks without being entitled to paid extra wages during their extra working period.

More to know;

Due to the ‘commercial realistic’ rule, the promoters have the right to sue the dealer as it stood précised that both parties did contribute and gain benefits. On the promisor side, the dealer could avoid remaining an enormous amount of old stock; which may be an obstacle from ordering new stocks and earning more profit in the way of selling off large amounts of old stocks.

While the promoter did give up their precious time spent on selling off the stocks; which they can choose to use the period doing other things. Hence, they won in the above case in getting the extra benefit of having a trip to Europe due to the word of ‘practical benefit’. Followed by the development of the world, the rule changed over time from ‘existing duty to ‘commercial realistic’; when limitations existed found in the rule through the days. The decision made in the case which mainly influenced the development of the rule was Musumeci v Wendell. In conclusion, the ‘existing duty rule existed created to please where the promise confers a benefit on the promisor without suffering any loss just like the case of Stilk v Myrick.

History and Criticism of traditional approach;

According to the researches, the ‘existing duty rule existed trenchantly criticized, avoided during its two hundred years history. It was noted that the court wasn’t focused on the presence of the consideration; but, on the need on public policy grounds to prevent extortive and fraud agreements existing between parties. This issue existed focused to solve especially in the nonexistence of an expanded concept of the duress. Besides, this rule leads to a few effects which include when a new promise exists; the court cannot use the existing duty of contract as a consideration while judging those cases.

Next, the rule affected a promisor facing a not legally bound to a new promise. In addition, whenever the promisor was not able to fulfill the new promise; a promisee would not have the right to sue a promisor. The above rule has strongly supported the side of a promisor and may lead a promise to a loss.

Different History and Criticism;

Hence, this rule wasn’t fully supported by an amount of public led to the development of several avoidances of techniques. To provide a better explanation, an example of mine in the ‘existing duty’ rule is when a dealer intends to sell off all the remaining old stocks, the dealer orally provided a promise of a trip to Europe for promoters who successfully sold above 50 stocks.

The above oral promise existed not written in black and white beyond the original contract. The dealer reneged his promise by refusing to commit the expenses for the trip to Europe. Hence, those promoters who reached the target sued the dealer for not admitting the promise. By using the ‘existing duty rule, the promoter’s claim will be unsuccessful; as it stood not written as a statement in the original contract. It stood also to argue that selling off the number of goods is not an additional act being a promoter. This is because the responsibility of a promoter is to promote a product, convincing customers to purchase it. Hence this is the responsibility but not an additional act of being a promoter.

Strength and Weakness of the rules;

Referring to the new ’commercial realistic’ rule from William v Roffey Bros & Nicholls and Musumeci v Wendell; its puzzle is that one party can threaten another party in extracting more payment or benefit additional provided under the original terms in the contract. While the ‘existing duty rule existed used in Stilk v Myrick, had overlooked; the additional risk in the terms of the original contract. Within these two rules, pros and cons existed found in them.

The ‘existing duty’ rule has protection against threat which requires something exceeds; unformulated can easily fulfill practical benefit as it’s a good motivation for a requirement of consideration. But, it does not protect when a new agreement stands substituted while the parties terminate an existing one. A situation where additional payment promises compromise if a bona fide dispute does not exclude too.

Additional rules;

‘Bona file is a Latin word which means ‘good faith’, it indicates sincerity; the fact in the case of a party claiming the title as ‘bona file buyer or possessor, innocence or lack of understanding of any fact that would occur doubt on the right to hold title is also what it signifies. Even a promise which undertakes additional risk, act, and forbearance wasn’t protected by the ‘existing duty’ rule too.

The “Commercial realistic” rule views its strength in the way of benefiting parties; that facing additional risk, act, or forbearance under the original terms in the contract as these will undertook. It merely had difficulty in defining the word ‘practical benefit’ as it has many different meanings. For example, ‘practical benefit’ can act as an effective doctrine of consideration that protects parties against casual promises; it could also be the advantage of obtaining the actual contract performance that is already due. Last but not least, it fails in meeting the expectation of parties to a renegotiated contract; and, ignores any actual benefits received by the promisor as a result of the contractual variation.

Summary;

In conclusion, the development of the rule existed influenced by the changing of ‘existing duty to ‘commercial realistic’; and eventually lack of precision in the traditional definition in Stilk v Myrick. The rule and its development have existed perceived through the situation of ‘commercial realistic’ in Musumeci v Winadell; and the modern law of ‘economic duress’ by legal experts. It should focus on the good faith of the contracting parties to decide the existence; and relevance of any supposed practical benefit in the development of contract law. Both doctrines of consideration and the more basic underlying basis of the law; themselves stood harmed by the introduction of practical benefit in the consideration.