A contract becomes legally enforceable only if a consideration has been furnished. The courts defined consideration as “a valuable consideration in the sense of the law may consist either in some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other”.
The Nature of Consideration
Generally speaking, a valid consideration can result from any act or a promise to perform any act. However, it is critical that the consideration is “real”, meaning a valid consideration must have some value in the eyes of the Law. As such, a promise that is not specific or vague will not be viewed as a consideration in the context of the Contract Law.
Rules that govern Consideration
Several rules apply to contract consideration, including:
- The law requires for consideration to be “real”, however the law does not require for consideration to be adequate. The courts are not concerned if the parties made a good bargain.
- Consideration must move from the promise – meaning that if a person other than the promise is to provide the consideration, the promise cannot enforce the agreement.
- Consideration must not be “past”, in the sense that the exchange of promises should take place at the same time.