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Contract law for small business

By Edited May 10, 2016 0 0

Contract 101: parts of a contract
What constitutes consideration

Usually, anything with money involved, or goods or services to be sold, will almost automatically qualify as valid consideration.
Sometimes however, money can be ruled out, depending on the parties' intent to create legal relations.

On the other hand, intangibles, such as feelings of love, are often and in general not considered to be sufficient consideration.

Intangibles can sometimes be sufficient consideration, for example even something as ephemeral as a wife conducting herself in a respectable and virtuous manner could constitute consideration (on the grounds where she did surrender a measure of liberty),as the scope of consideration is widening. Other intangibles could be making a person happy, or things with definite practical benefit.

While sufficient consideration is admissible in the eyes of the law, adequate consideration is irrelevant.
Eternal love from your dog to you would be an adequate but insufficient consideration in the eyes of the law, whereas paying $10 for a lamborgini would be inadequate but sufficient consideration.
Alternatively, $10 for a car may be inadequate and $50,000 for a car might be slightly more than adequate, but both are relevant and sufficient considerations.
The court's concern is with sufficient consideration, and not adequate consideration.

Take note that certain areas disapprove of nominal considerations. This involves items in the contracts which includes sums of $1 as legal benefit.

Forbearance has in past cases been shown to act as a sufficient factor,
there is sufficient consideration by abstinence, forbearing from one's legal right to engage in certain actions, such as the right to sue, or to work for a rival company.
Restricting one's freedom and liberty is thus a valid consideration.

However, courts do have substantial latitude in their interpretation of consideration, giving them a certain freedom in deciding whether to enforce contracts, to a point where some may even find it arbitrary. What works for one might not turn out as well for another, depending on the material facts of the case.

It is a doctrine plagued by randomness and vagueness arising from the court's liberty in manipulating the abstract concepts of value upon the available factual matrices that are put out before them.

At the end, there will be circumstantial differences for everyone. If you are ever in doubt, you should always clarify it with a legal advisor.
Take note that this is only for civil cases, if you don't understand the difference between civil and criminal law.


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