International Business Law - Definition and Explanation of Consideration - Essay Example

?International Business Law Table of Contents International Business Law Introduction 3 Definition and Explanation of Consideration 3 (a) Consideration Must Be Sufficient but Does Not Have to Be Adequate 4 (a) Past Consideration Is Not Good Consideration 6 Conclusion 8 References 9 Introduction International law consists of a body of rules that governs the relations between the two states. The primary objectives of international laws are to maintain harmonious, balanced and economic relationships between the states. International business laws often serve as dispute resolution for international transactions. Different types of laws has been enacted and enforced in order to ensure smooth functioning of international business. In relation to international business law, law of contract serves as an important element for ensuring fair international trade and transactions. Law of contract is an essential element that aid in protecting the interest of parties involved in an agreement. In this regard, ‘Offer’, ‘Agreement’, ‘Acceptance’, ‘Consideration’ and ‘Intention to create legal relations’ are ascertained to be important element related to law of contract. Correspondingly, this paper intends to discuss about the concept consideration and critically evaluates the two statements regarding consideration (Jenks, 2012). Definition and Explanation of Consideration In relation to the law of contract, the term consideration is understood as a very important element which is required while making a contract. In its simple meaning, the doctrine of consideration is regarded as the principle way of deciding whether an agreement that has resulted from the exchange of offer and acceptance should be legally enforceable. The doctrine of consideration may include a promise for the performance of a particular act and may also consist of statements to refrain from the performance of certain tasks or acts that someone has the legal authority to do. The doctrine of consideration is looked as detriment for the party performing his part of agreement and benefit for the other party. The doctrine of consideration on the other hand, can also be understood as the mode of connection which brings together different parties under a single contract (Jenks, 2012; Wilshart, 2012; Taylor & Taylor, 2007). (a) Consideration Must Be Sufficient but Does Not Have to Be Adequate The above statement i.e. consideration must be sufficient but does not have to be adequate lays broad importance in the overall context of law of contract. It is essential that consideration must be sufficient. This means that what is being put forwarded in the agreement by the parties entering into it must be something which can be recognized as legally capable of constituting consideration. This aspect provides the maximum amount of weightage because consideration is the root to establishment of long term and short term business relationship. Also, the consideration gives birth to the establishment of contract between multiple parties. As consideration is an essential part of a contract, it derives primary importance in the overall context of law and when the contract gets breached in any case it also accounts for punishment. Taking this aspect into concern, it can be stated that the consideration must be sufficient. Therefore, before the establishment of any contract, the primary importance needs to be delivered in making a consideration sufficient. In addition, consideration plays a very important role for the formation of business in the international landscape as well. This factor lays primary importance because in order to form international business channels, there are various factors that are needed to be taken into concern and consideration between the parties in a contract being the most important (Charman, 2013; Goode & Goode, 2011). If a consideration is sufficient then it will also lead to start up of a contract in an ideal manner. It will lead to proper functioning of a contract in a legalized form. All these aspects combined will lead to fulfillment of all the allegations of contract in an appropriate manner. This way it will also lead to the better protection of the rights of the parties in the contract. It will also lead to protection of the interests and the property of the parties involved in the contract (Charman, 2013). On the other hand, consideration need not be adequate signifies that the court are not interested in ascertaining whether there was a match between the value offered by the parties involved in the agreement. The word adequate stands for the ability to fulfill the broad requirements or to meet the demands in an ideal manner. Legally, the term adequate does not seem to reflect a wholesome meaning. In general terms, it indicates overall completeness and definitely poses a positive implication in terms of law. However, this term do not necessarily apply in relation to the term of consideration which is a prime element in a contract. As explained in the above sections, consideration needs to be sufficient as it lays various aspects of importance. But the term consideration does not go well with the term adequate. It is paramount that consideration must be sufficient but it does not necessarily mean that consideration has to be adequate. The term sufficient consideration is totally different from that of adequate consideration because adequate consideration relates to property, money or a promise whereas sufficient consideration do not encompass any monetary transactions but it is only characterized by the verbal agreements that primarily consist of promises which are made by the parties involved in a contract. It is more of an agreement which binds itself with the parties with very less involvement of aspects relating to money or property. On the other hand adequate consideration is made between those parties who are ready to get into contract terms by way of concerning large amount of money or even property that may be exchanged between the parties in a contract for the start up of the contract. Adequate consideration is also taxed between the parties by way of a payment which derives equal value as that of an act which is needed to be fulfilled by way of formation of contract (Charman, 2013; Gillies, 2004). Looking at these broad implications, it can be agreed upon that adequate consideration do not have the greater implication as compared to sufficient consideration. An ideal contract do not necessarily requires large amount of capital or property, it can be simply be formed by way of mutual partners who agree to share the incomes and bear the losses equally. In such type of agreements mutual understanding is developed between the parties and a contract can be formed by way of mutual agreements and independent partners. The only aspect that is needed to be considered is that the partners sharing a contract need to keep their promises for sharing a healthy business relationship in a contract. If such aspects are considered, then it can also lead to variable results for international business outcomes as well (Charman, 2013). (a) Past Consideration Is Not Good Consideration The above statement i.e. past consideration is not good consideration holds primary importance in the modern day context governing the law of contract. As the doctrine of consideration is one of the most important parts of a contract, due emphasis is needed to be made while determining the broad aspects through which a contract is formed in an appropriate manner. Furthermore, it is also required to be ensured that a contract is formed without any elements of breach in the terms and conditions. In addition, it is also needed to be determined that the different parties involved in the contract have a mutual understanding towards each other so that it does not give rise to any kind of discrepancies in the near future (Worrells, 2008). These aspects are very much important for the life of a business contract because if the entire partners in a contract have an agreed consideration then it will benefit them for in the later years of business. The past consideration in the overall context of business law did not fully support these broad aspects even though these aspects have high importance in the modern day context of law. However, if all those past considerations are avoided and considerations relating to maintenance of healthy business contracts are made then it can lead to large amount of benefits to all the parties involved in a contract (Worrells, 2008). The significance of this particular aspect can be understood in an in depth manner by way of looking upon the past consideration and its irrelevance. Consideration is needed to be valued and also need to represent high importance in the context of formation of contract. The past consideration does not have this element. A consideration also need to be real and again past consideration does not reflect any such important aspects. Furthermore, past consideration reflects problematic forms of payments between the different parties involved in a business contract. There are untimely transfers and exchanges of money that are noticed in this particular form of consideration. Not only money but also transfers of assets do not undergo a safer mode of transfer process. The party involved in the past consideration does not value the aspects of consideration as it should have been. The past consideration is also not ascertained to be very contingent. Moreover, past consideration relates to making valuable returns for the services or the products that is received in the past, it generally opens up the ground for deceit. No one can fully rely on the on someone for receiving payment for the services which is delivered in the past. In fact, it may give rise to the possibilities of fraud which may reflect from the part of that party who has received creation services or products in the past. Also, past consideration is not fully considered to be a valid consideration and is not ascertained to have a legal value (Street, 1999). Taking all these aspects into concern, it can be critically argued that the past consideration is not a god consideration as it involves large amount of risks to the parties involved in a contract. Especially, the interests of those parties are in stake who contributes valuably in monetary terms as there is no assurance that they are going to get their returns. Additionally, there are no legal compulsions associated with this consideration and all the partners involved in the contract does not possess the right to sue someone who has breach the contract (Goode & Goode, 2011; Worrells, 2008). Conclusion From the above analysis, it has been ascertained that the doctrine of consideration act as a means by which court decides whether promises made by the parties entering into a contract are enforceable. Moreover, consideration should have legal value and it should not be vague or uncertain. Accordingly, it has been observed that market value of the consideration is irrelevant. Furthermore, past consideration is not termed as consideration. Hence, it can be stated that consideration should not be past. References Charman, M., 2013. Contract Law. Routledge. Gillies, P., 2004. Business Law. Federation Press. Goode, R & Goode, R. M., 2011. Principles of Corporate Insolvency Law. Sweet & Maxwell. Jenks, E., 2012. The History of the Doctrine of Consideration in English Law. General Books LLC. Street, T. A., 1999. The History and Theory of English Contract Law. Beard Books. Taylor, R & Taylor, D., 2007. Contract Law Directions. Oxford University Press. Wilshart, M. C., 2012. Contract Law. Oxford University Press. Worrells, 2008. Past Consideration is generally not Good Consideration. About Us. [Online] Available at: http://www.worrells.net.au/eUpdateNewsletters/ArticleArchive/ViewArticleArchive.aspx?Arti eId=310 [Accessed October 22, 2013]. Read More