Download Understanding Contractual Consideration in Business Law and more Lecture notes Contract Law in PDF only on Docsity! Business/Marketing Virtual Learning 10-12 grade Business Law May 5, 2020 Lesson: [May 5, 2020] Objective/Learning Target: Consideration Identify the three requirements of consideration. Consideration We will further examine the requirements of contractual consideration: 1) Promise, Act, or Forbearance - When looking for consideration, look for legal value in the underlying act that is promised. If someone promises forbearance—or to not do something—look beneath the promise and ask if the forbearance has legal value. Both the acts and promise have value in the eyes of the law. 2) Contractual Exchanges - In a typical contract, one party in effect says to another, “If you do this for me (pick up my mail and watch the house), I shall do that for you (pay you $100).” A person promising an action or forbearance is the promisor. The person to whom the promise is made is the promisee. In most contracts, the consideration necessary to legally bind a would-be promisor to his or her promise is identified through bargaining leading up to a mutual exchange of promises. In certain instances, however, bargaining is not possible. Consequently, an offeror must make a blind unilateral offer hoping the offeree will accept by performing the consideration the offeror desires. Consideration must be mutual. If either of the parties does not receive the required consideration, that party has no duty to perform as promised. Consideration 3) Legal Value - Legal value means there has been a change in a party’s legal position as a result of the contract. Legal value (a change in legal position) is most commonly found in this form—in the exchange of two benefits. Legal value also can be found in the exchange of benefit for a detriment. With regard to legal value, the detriment is the forbearing of a legal right. A detriment always arises when you promise forbearance—that is, promise to refrain from doing what you have a right to do. If your uncle said on your eighteenth birthday, “Look, if you refrain from driving until your twenty-first birthday, I’ll give you $25,000.” You respond, “Yes, I accept.” What you have promised is not a benefit to your uncle, but rather a detriment to yourself—you have given up a legal right. This is a change in your legal position and is thus valid consideration. Legal value also can arise from the exchange of two detriments. If you say to your neighbor that you will forbear buying a dog if she will forbear building a fence and she agrees, both parties have changed their legal positions. Therefore, there is consideration for each party’s promise. ACTIVITY #22 1) List the three requirements of consideration. 2) After you ask for permission, your dad promises that he will let you go out tonight if you will clean your room to his satisfaction tomorrow. You agree. Who is the promisor and who is the promisee in this situation? 3) John, a writer, gets a call from his editor and, consequently, has to leave immediately on a research trip to Hudson Bay and Newfoundland in Canada. As the trip should take a couple of weeks, he leaves a note offering to pay his neighbor, Jordan, $100 to watch his house and feed and walk his dog during the absence. John then leaves without ever speaking to Jordan. Jordan gets the note and complies. a) Is there an enforceable contract? b) What is the consideration for each party? c) Was Jordan’s consideration an act or a forbearance in the contract that was created? Explain.
