Fundamentals of Business Law - Essay Example

?International Business Law Table of Contents Introduction 3 (i) Definition and Explanation of Consideration in relation to the Law of Contract 3 (ii) Critical Evaluation of the Consideration Statements 5 (a)Consideration Must Be Sufficient but Does Not Have to Be Adequate 5 (b)Past Consideration is Not Good Consideration 7 Conclusion 9 References 10 Introduction A contract can be defined as an agreement wherein two parties are mutually agreed to accomplish any task through adhering certain rules and guidelines. An effective contract engages various aspects including laws along with policies, security concerns, payment related issues, notice to commence a project and communication process among others. It is worth mentioning that a valid contract involves certain significant facets such as offer and acceptance, consideration, legal terminology and intention to build a legal interrelation between parties. With regard to the efficiency along with the adequate significance of a valid contract, the aspect of consideration is often viewed as one of the major attributes which ensures to clearly understand about the conditions accepted by both the contractual parties during an agreement (MacMillan & Stone, 2012). This paper intends to critically define and explain the aspect of ‘consideration’ in relation to the law of a contract. In order to critically understand the major guidelines underneath the aspect, the discussion of this paper would highly focus on critically evaluating the statements regarding consideration that include “past consideration is not good consideration” along with “consideration must be sufficient but does not have to be adequate”. (i) Definition and Explanation of Consideration in relation to the Law of Contract In relation to the perspective of contract law, the aspect of consideration is identified as a set of principles that are agreed by both the parties while entering into an agreement. With the purpose of enforcing a contract, it is essential for both the party(s) to agree with certain terms along with conditions concerning payment. Therefore, consideration in a contract can further be stated as the commitment of paying the price of a contract by the other party. Consideration may also be recognised as the benefit or interest acquired by one party with loss or liability given by the other party (Field, 2012). Moreover, consideration is also defined as the fundamental prerequisite which denotes certain essential terms along with conditions, to be accepted by both the contractual parties in achieving the predetermined objectives of the contract. Owing to the stated concern, the fundamental law governing the facet of consideration is generally defined as agreed equivalent and inducing causes of the parties, for the purpose of satisfying the value and validity of the contract (Xie, 2010). Therefore, consideration of a valid contract generally incorporates three major types of obligations that efficiently enable the contractual parties to accomplish their desired objectives. In this regard, the obligations relating to the doctrine of consideration include the following: The obligations associated with a valid and a justified contract law ensure to act independently for smooth progress of the contractual agreement The obligations that are allocated by the third party of the contract and The obligations that exist in a particular contract with an individual, who has created a new promise, for which the persisting obligation is suspected in offering a valid consideration of a contract (MacMillan & Stone, 2012). Roles and Significance of Consideration With reference to the law of contract, consideration ensures to play a decisive role for both the parties in order to achieve a valid contractual agreement. In relation to determine the importance of consideration, it can be affirmed from a broader outlook that ensuring the incorporation of valid conditions in line with the justifiable requirements of a contract is an essential role of consideration. The aspect i.e. consideration in this context enables the promisee to enjoy the agreed or the accepted conditions that made by the promisor during the contractual agreement (Miller & Jentz, 2009). Additionally, the process legal benefits also ensure to protect the promisee from the incompliance of the conditions that are mutually agreed by both the parties under legal guidelines and provisions. Furthermore, the intervention of a well-build consideration in a legal contract also tends to provide adequate support both to the promisor and the promisee in efficiently performing and managing all essential obligations that accept by the parties (Xie, 2010). Thus, on the basis of the above discussion, it can be affirmed that consideration plays a decisive part in making the validity of a contract by a greater extent. (ii) Critical Evaluation of the Consideration Statements (a) Consideration Must Be Sufficient but Does Not Have to Be Adequate The statement “consideration must be sufficient but does not have to be adequate” significantly refers as one of the primary laws governing consideration of a valid or a legitimate contract. The statement expressively denotes the significance of essential guiding principles of a successful consideration in meeting contractual objectives. With regard to a valid contract, Tufal (n.d.) has critically identified that the doctrine of consideration incorporates certain values that are not adequately investigated by the courts. In accordance with the above statement, the doctrine can be recognised as a set of reasonable and acceptable regulations, which aids in complying with the required objectives of a contract. In this regard, the regulations that exist within the doctrine of consideration ensures to provide substantial agreement records of the parties and their mutually accepted terms along with conditions to efficiently accomplish the contractual objectives (Tufal, n.d.). Most significantly, according to Xie (2010), the statement also expressively demonstrates certain arguments with the perspective of value of consideration and existing laws protecting a contract. In relation to the principles underneath the common law, the promisee tends to endow the valuable considerations, only when the previous conditions are duly met by the promisor. With regard to the notion of legal benefit, the flexibility during the consideration process may also obscure the courts’ decision towards making appropriate decisions regarding the legal benefits or detriments of the promisor. For example, the case of Williams v. Roffey Brothers (1991) has been recognised to provide factual benefits to the promisor and involved in a confound position concerning the legal rules for benefit or detriment. Moreover, the author has also expressively demonstrated that the flexibility in the process often identified to create negative impact on the values and obscures the defined scope of a valid set of considerations (Xie, 2010). Therefore, it can be stated that the consideration should be valued but does not have to be adequate in order to build valid consideration of a contract. However, the study of Weitzenboeck (2012) further stated that the doctrine of consideration must need to ensure the deliverance of certain benefits to the promisor which led towards the regulation of considerations. For example, Thomas v. Thomas (1842) and Chappell v. Nestle (1960) are few of the major cases, which can be viewed leading towards the regulation of considerations (Weitzenboeck, 2012). Furthermore, Bygrave (2013) also stated that considerations must have certain material and/or economic values, even if they are found to be insufficient. With regard to conduct a valid contract, considerations must not be solely focused on emotional or any types of sentimental values. In this context, the case of Thomas v. Thomas; White v. Bluett (1853) and Hamer v. Sidway (1891) can be taken into concern (Bygrave, 2013). Thus, based on the above discussion, it can be affirmed that ‘consideration must be sufficient but does not have to be adequate’. (b) Past Consideration is Not Good Consideration In relation to an effective and a valid contractual process, the statement “past consideration is not good consideration” can also be viewed to create uncertain conception in ensuring the promisor’s beneficial or detrimental measures for the promisee. The study published by Oxford University Press (2012) revealed that although consideration tends to make payments in response to the promise, the regulation of a valid contract prohibits the promisor to make any consideration unless the previous promise is accomplished. In this context, the governing law of a valid contract would consider the promise as a complimentary one and it will also be regarded as an unenforceable in response to the promisee’s earliest payment or return (Oxford University Press, 2012). Therefore, a past consideration of a valid contract cannot be regarded as sufficient, if the promisor offer any promise prior to meeting the previous considerations. With reference to the study of Miller & Jentz (2009), the law associated with consideration have provided a clear justification regarding the statement “past consideration is not good consideration.” In this context, it can be apparently viewed that when individuals or groups are entitled in a valid contract and one of them ensures to provide additional benefits, the proposal is termed as an unsupported offer in response to a fresh consideration (Miller & Jentz, 2009). In the similar perspective, Chen-Wishart (2007) also stated that consideration can be termed as past, if the performance is made before the promise. In this regard, it has been identified that the later promise made by the promisor cannot be accepted in a logical perspective, as the individual is already involved in another promise. In this regard, the case of Eastwood v Kenyon (1840), in which the guardian had raised a financial loan for the purpose of education and marriage of the young girl can be taken into concern. According to the case, after marriage, the husband of the girl was promised to pay off the loan amount. In this regard, the guardian of the girl is not liable to enforce new promise (Chen-Wishart, 2007). In addition, the doctrine of consideration can also be termed as past as it involves reciprocal promise, and therefore, it is not liable to buy any new promise associated with the contract. In this regard, the case of Roscorla v Thomas (1842) can be taken into concern supporting the statement “past consideration is not good consideration”. Conclusion From the above analysis, it can be affirmed that the doctrine of consideration is witnessed to involve different controversial issues associated with a valid contract among the parties. In order to prepare a valid contract, the aspect of consideration can be taken into concern as one of the major facets for the parties. However, the competence of consideration does not require in preparing a valid contract due to certain fundamental rules. In relation to the overall observation of the study, it can be apparently recognised that the statements associated with the consideration of a valid contract involves different controversial aspects linked with various attributes that are determined to prepare a valid contract amid the parties. Moreover, it has also been viewed that consideration ought to incorporate values associated with contractual policies, but it does not need to be adequate. Moreover, a justifiable amount of economic values should also be incorporated, even if considerations are found to be insufficient in effectively addressing the guiding principles associated with a valid contract. References Bygrave, L. A., 2013. Consideration. JUS5260 Spring 2013, pp. 1-6. Field, C., 2012. Elements of a Contract. Fitzroy Legal Service. [Online] Available at: http://www.lawhandbook.org.au/handbook/ch12s01s02.php#Ch125Se60972 [Accessed October 23, 2013]. MacMillan, C. & Stone, R., 2012. Elements of the Law of contract. University of London International Programmes, pp. 1-52. Miller, R. L. R. & Jentz, G. A., 2009. Fundamentals of Business Law: Excerpted Cases. Cengage Learning. Oxford University Press, 2012. Enforceability: Consideration, Formalities, Promissory Estoppel. Past Consideration is Not Good Consideration. [Online] Available at: http://fds.oup.com/www.oup.com/pdf/13/9780199644841.pdf [Accessed October 23, 2013]. Tufal, A., No Date. Consideration. Rules Governing Consideration. [Online] Available at: http://www.lawteacher.net/PDF/Consideration%20Lecture%201.pdf [Accessed October 23, 2013]. Weitzenboeck, E. M., 2012. English Law of Contract: Consideration. Norwegian Research Center for Computers & Law. [Online] Available at: http://www.uio.no/studier/emner/jus/jus/JUS5260/v12/undervisningsmateriale/Consideration.pdf [Accessed October 23, 2013]. Xie, Z., 2010. Onwards A Normative Basis of the Doctrine of Consideration. Graduate Department of the Faculty of Law. [Online] Available at: https://tspace.library.utoronto.ca/bitstream/1807/25523/5/Zhuoyan_Xie_201011_LLM_thesis.pdf [Accessed October 23, 2013]. Read More