Some of the circumstances for when a court would question the consideration being offered.

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Some of the circumstances for when a court would question the consideration being offered.

Consideration is legal value promised to another party when making a contract. It can take the form of either a tangible payment or the performance of act such as money, physical objects, services, promised actions, abstinence from a future action, and much more. If X signs a contract to buy a motorcycle from Y for $100,000, X's consideration is the $100,000, and Y's consideration is the motorcycle. Consideration consist of two elements: something of legal value must be given and there must be a bargained for exchange. If there is no element of consideration found, there is thus no contract formed.

Generally, courts do not inquire whether the deal between two parties was monetarily fair or not and do not question the adequacy of consideration in a contract, but that even a bargained for exchange of a peppercorn may form the basis of a valid contract. Some exceptions for when a court may question the considered offered are:

Illegal consideration: if the other party in contract used an illegal act to make payment in contract then these consideration are void by court. The illegal act doesn’t support the contract and promises shouldn’t be influence by the illegal activities. For example if someone is threatened to kill or had mental torcher in order to make payment then it can be treat as illegal consideration in that case court can question to considered.

Illusory promises: if the two parties have contract and done agreement on their responsibility, if at some time period one or both party chose not to perform their contractual obligation, then contract lacks consideration. It’s like false promises, first agree on duty and obligation in contract then avoid it on future.

Moral obligation: moral obligation is not treated as the legal consideration because it is based on promises made out of a sense of moral obligation and they lack consideration. The promises are done through affection and love. Gift promises and moral obligation are not considered supported by valid consideration. There is no any written document and it totally based on what parties thinks for each other.

Preexisting duty: A promises lacks consideration if a person promise to perform any duty that already they are obligate to do. The task that is responsibility of person to do and again if contract placed to do same task, then promises is unenforceable because no new consideration has been given. If the term of contract are change during the course of its performance such changes are unenforceable. For example Sam is today 10 years old. Sam dad promises Sam to give $5,000 if he will not smoke until his 18^th birthday. After 8 years in his 18^th birthday he asked $5,000 money but dad didn’t pay it. Because according to the law no one are allow to smoke until their 18^th birthday. Here Sam preexisting duty is not to smoke until he will 18 years old and in this case the promises lacks consideration and dad will win.

Past consideration: A promise based on a party’s past performance lacks consideration. If there is no new consideration is placed in the contract then this types of contract are unenforceable. Such that contract are enforceable if only if some new consideration is given to support the contract. For example if contractor promise to give bonus to their worker because they done great work last year and after some time if contractor refuse to give bonus, the worker cannot recovery the bonus because there is no any consideration. The contractor uses past consideration and these type of contract are unenforceable.

References

Cheeseman, H. R. (2006). Agreement and Consideration. In Contemporary Business and Online Commerce Law (pp 194-198). Upper Saddle River, New Jersey : Person Education Inc.