Legal Rules of Valid Consideration

Let`s break down each part of the legal definition of consideration: The counterparty must move at the request of the promisor: an act is not a valid consideration for the promise unless it is done at the request of the promisor. Therefore, the action or abstinence must be made or promised at the request of the promisor. It is not necessary for the promisor himself to benefit from his action, but his desire is essential. Example: D, on the orders of the collector of a district, built at his own expense some shops in a bazaar. The stores were occupied by various merchants who promised D. a commission for the items sold. It was held in an action brought by D for recovery of the commission. that the promise was not supported by consideration, since the market was not built at the request of the trader, but of the district receiver. Certain elements must be met for the consideration to be considered sufficiently legally valid. Without this legal sufficiency, the consideration as well as the entire contract will be considered void. Documents are an exception to consideration, as they do not need to be supported by consideration.

For consideration to be valid, a promise must be made by both parties, while documents without consideration may be valid. Deeds are written contracts that must stipulate that it is an act and must be signed, sealed and delivered by both parties. They are legally binding without compensation, but have special requirements that help them be abused. Documents may require one or more witnesses. A simple contract has a statutory limitation period of six years, which means that a plaintiff must invoke a breach of contract within six years of entering into the contract. The limitation period for a document is 12 years. A party that is already required by law to provide money, an item, a service or leniency will not provide any consideration if it simply promises to comply with this obligation. [32] [33] [34] This legal obligation may arise from the law or from an obligation arising from a previous contract. Labriola sued the Pollard Group and sought a declaratory judgment annulling the non-compete obligation.

A declaratory judgment is used when a dispute has arisen but no damage has yet occurred. Labriola asserted that there was no consideration since it had not benefited from the 2002 non-compete obligation. The trial court disagreed, saying the deal was a valid contract, so Labriola appealed to the Supreme Court. The Supreme Court ruled in favour of Labriola, finding that under the new agreement, Labriola had received nothing more than his continued employment from Pollard Group and therefore had provided nothing in exchange for him. Only the Pollard group benefited. For this reason, the non-compete obligation was found to be unenforceable and Labriola was free to seek work in other printing plants in the Tacoma area. Suppose A is a screenwriter and B runs a film production company. A said to B, “Buy my script.” B says, “How about that – I`m going to pay you $5,000 to let someone else produce your film in a year. If I produce your film this year, I will give you another $50,000, and no one else will be able to produce it. If I don`t produce your film this year, you can leave. If the two then conflict, the question of whether a contract exists is resolved. B had an option contract – he could decide whether or not to produce the script.

B`s consideration was the $5,000 down payment and the $50,000 possibility. A considered exclusive rights to the script for at least one year. Considerations may lie in the past, present or future. Considerations can be made before the promise is made by the promisor. For example, if you apply for a job before a promise, your salary package will be communicated to you. This is an example of past considerations. If promises and considerations are made at the same time, then we are talking about current consideration. For example, if you buy something from a store and pay for it locally. If the consideration for a promise is made after the conclusion of the contract, it is called future consideration. For example, you hire someone for architectural plans and promise to pay them once their plans are approved by the boss.