The issue of this case was whether the consideration was sufficient for the offer. The defendants paid by cheque, and as soon as they cashed it, the plaintiffs brought an action to recover the balance of 182. It was held that the promise had been made without consideration from the plaintiff, for by law, the plaintiff was already bound to attend the court and give evidence.If however, the plaintiffs acts or promises to act in excess of his duty under the law, then this would constitute consideration. Method: We motivate the tutorial by reviewing policy statements and theoretical information from allied literature. Want High Quality, Transparent, and Affordable Legal Services? If a party to a contract simply promises to carry out or carries out an already existing contractual duty to the defendant, he has offered no consideration for any fresh promise that might have been made by the defendant. It is specifically understood and agreed that the exclusive licenses defined in Paragraph II above relating to the specific territory set forth on Schedule A, and the Royalty defined in Paragraph IX shall be deemed adequate consideration for this Agreement. A void agreement has no legal significance and is thereby non-enforceable. in a dissenting judgment, pointed out that the plaintiff was already contractually bound to marry Ellen Nichol, and it was not done at the request of the uncle. However the Supreme Court rejected this argument as it held that it was not within the province of the court of appeal to query same as such would amount to dictating the terms of the contract to the parties. When honoured, it is actual payment. In the recent case of Employment Staffing Group v. Little, the North Carolina Court of Appeals determined that the sum of $100.00 is adequate consideration for a non-compete covenant in the context of continued employment. The Courts generally do not inquire into the adequacy of consideration. Duty imposed by contract with the promisor; andc. In Sum, the rule remains that consideration must be sufficient but need not be adequate. 2010 California Code Civil Code Chapter 5. Re McArdle (1951) A wife and her three grown-up children lived together in a house. there is authority for the position that a consideration so small that it negates Similarly in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915], the Court defined it as, An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.. What Is Consideration. In order to be able to do so, they would have to show they were a party to a contract with the plaintiff (owner of the goods) and that they furnished considerations. Nig. However, it must be real, that is, the consideration must have some value in the eyes of the law. Purpose: This tutorial discusses what it means to be a culturally responsive speech-language pathologist (SLP) and then grounds this discussion in strategies that SLPs can engage in to diversify the books and other materials that they use in clinical practice. Its main purpose is to persuade an interested party into a contract. For example, you cannot sue a shopkeeper for displaying a prohibited product on the shelf, as this does not express his intention to sell it. Thus in the absence of fraud or duress, the courts will not investigate the value of the car to see whether $5 is a fair price for it. chocolate bar wrappers in Chappell v Nestle [1960] deemed to be sufficient. We will draw up a simple scenario to guide our conversation on the discuss. Can an agreement by one party to accept less than he is entitled to under a contract be enforced against him? Consideration is something of value that is exchanged in return for the promise of performance by the other party. Whilst consideration need not be adequate, it must, however, have some value in the eye of the law. It was held that the chocolate wrappings formed part of the consideration. Executed consideration is a performed, or executed act in return for a promise. This can be seen in the case of Pharmaceutical Society v Boots Cash Chemists Ltd. Issues to do with contract consideration may occasionally prove to be quite demanding. Section 25 of the Indian Contracts Act states that any contract without consideration is void and not enforceable. 256; 124 N.Y. 538, (1891) or by the father of an illegitimate child to pay the mother an allowance if she proves to him that the child is well looked after and happy.From this comprehensive presentation, the following points can be made: a. Section 25 suggests that an agreement done under the free will are not void merely because the consideration is not adequate. Adequacy of Consideration. Does a person who does, or promises to do, what in law he is already bound to do thereby furnish consideration? Our view is that as the person is already bound to carry out the act in question, his carrying it out or promising to do so involves no extra detriment to him, and it, therefore, has no value in the eye of the law. In law, adequacy of consideration means that for a lawful agreement to be made between two parties, the offeree, also known as the beneficiary, must give in return, a fair price, that is either in equal measure or reasonably proportional to the value given by the offeror, also known as the benefactor. Hire the top business lawyers and save up to 60% on legal fees. The term sufficiency describes something that the courts can see of value that makes the bargain binding, whilst adequacy may describe the full value of something. I have got what I asked for and that is sufficient benefit. [6] Further on section 25 (f) illustrates that if A agrees to sell his horse worth 1000 for Rs 10. Hence, the contract can be held valid and enforceable against the other party (Mr A) in the absence of fraud or duress. By means of a short recap we should state that consideration is one of the vital elements of a contract. In the relatively recent case of New Zealand Shipping Co. V. A. M. Satter Ihwaite & Co. (1975) A.C. 154; (1974) 1 All E. R. 1015., which came before the House of Lords in its capacity as the judicial committee of the Privy Council;Facts of the case were as follows:A contract for the carriage of goods by sea between the carrier (the shipping company and the shipper {owner of the goods}, contained a clause limiting the liability of the carrier in case of any damage to the goods {expensive drilling machinery) before delivery to the consignee. Ex ante: non-enforcement hurts weak party. More so, to enforce such a promise would be contrary to public policy since it might encourage extortion by public officers or persons under a public duty.In Collins V. Godfroy, the plaintiff was subpoenaed to give evidence in a case on behalf of the defendant. Adequacy of Consideration; Mutuality of Obligation. The 'Apply with SEEK' option will be utilized for International applicants, mainly Australia. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. In principle, therefore, no consideration is too small or too much or unfair. Such cases are merely extreme examples of the rule that the courts will not judge the adequacy of consideration. As such, you will need the help of legal professionals. Cole pleaded that at Pinnels request he had paid him 5, 2shillings and 2pence on October 1, 1600 and that Pinnel had accepted this payment in full satisfaction of the original debt of 8, 10shillings.Judgment was given to the plaintiff on a point of pleading.The court held that the payment of a lesser sum could not discharge a debtor from the obligation to pay the full amount of debt, the consent of the plaintiff notwithstanding: However, recourse should be had that the court in this case listed exceptions to the rule it was laying down. You have parted with something you might have kept and that is sufficient detriment. This element has been specified in Section 2(d) and 25 of the Indian Contracts Act of 1872. Giga-fren. He insisted that a determination of the adequacy of consideration requires a case-by-case analysis in order to protect "at-will employees from the whim of the employer." Here, in his view, it was relevant that McGinnis signed the covenant at the time he was hired, that the period of McGinnis's post-covenant employment (18 months) was . 13900 (1989). While "it is an elementary principle that the law will not enter into an inquiry as to the adequacy of consideration," 2 . For the purpose of clarity and convenience, the issue of sufficiency will be discussed under three broad categories. The matter of adequacy of consideration comes into the picture during the formation of the agreement and not when it is sought for enforcement. But the wrapper are of no value to me, and you might be glad to be rid of them. Once the deposit is done the appellant will be entitled to have the sale deed executed in the period of 3 months. The contract was supposed to be executed one and a half years thereafter. Was this document helpful? If this does not apply to you please use the 'Apply' option. The price, however, may come in several forms: For example, if you offer to sell off your house to someone at $50,000, and in exchange, he offers services to you worth this amount, then the consideration is deemed to be adequate. In the old English case of Currie v Misa [1875], consideration was defined as: 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 clause also contained provisions which purported to extend this protection to the servants, agents and even independent contractors of the carriers. Save my name, email, and website in this browser for the next time I comment. Earl v. Peck, 64 N.Y. 596 (1876). Required fields are marked *. Wilde B., did not find anything wrong if a person chooses to promise to pay a sum of money in order to induce another to perform that which he has already contributed with a third person to do. This position of the law is rooted in the idea of freedom of contract. Even though the act does not mention the difference between nominal consideration and inadequate consideration, the court through the cases has made sure that the difference stands strong one such case is that of Midland Bank trust vs Green. So sufficient consideration can be offering anything of ANY economic value e.g. Judgment was entered for the plaintiff. In this case, the accommodation which the appellant provided for the respondent, its employee, at Ikoyi was worth 65000 Naira per annum in the market, but that by agreement between the parties he was only paying 400 naira per annum. On ther other hand, it is said that the actual performance of the legal duty may be of considerable value to the promisee who may find his legal remedy for breach less beneficial than actual performance. A Sufficient consideration concentrates on the value of the object . Section 25 states the requirement of a legal consideration for a contract to be valid and mentions the exceptions for the same[15]. c) Non-consideration doctrines: Fraud, Mistake, Duress, Unconscionability B. In the case of Ladgroup Ltd. v. First Bank of Nigeria, it was held that 300 Naira was adequate for the dispatch of shipping documents by the respondents on behalf of the appellant. The Department also holds the view that in making assessments of the adequacy of managers' actions, consideration must be given to the environment in which decisions are made. [16]S. 10, The Indian Contract Act, 1872. Adequate consideration refers to a price which is equal in value for an act or a thing for which it is given. Sample 1 Sample 2 Sample 3 See All ( 12) More recently, J.C. Smith in support of this view stated that the idea that consideration must be an economic benefit was erroneous: all that is necessary is that the defendant should, expressly or impliedly, ask for something in return for his promise, an act or promise by the offeree. However, in Sibree V. Tripp and Godard V. Obrien, (1882) Q.B.D.37., the defendants who paid lesser sums in discharge of a greater sum by way of negotiable instruments, successfully relied on the concept of new elements inherent in the exceptions to this rule in Pinnels case.It was held that payment by use of paper, instead of cash, constituted a new element, and, therefore, consideration for the promise to accept a smaller sum. The defendants negligently handled the goods and damaged them in the process of unloading. Even lawyers sometimes get it wrong hence the criticisms that have followed it right from the evolution of the law of contract. In the first place, in view of the frequent refrain that consideration must be something of value in the eye of the law, it is essential to determine the meaning of this statement. Section 25 also mentions the element of the adequacy of consideration and specifies that it is not an aspect that decides the validity of the contract except in the conditions of absence of free will. Thus, in Cumber V. Wane (1846) 15 M. & W. 23; the plaintiff who had earlier accepted a promissory note for part of a debt owed him by the defendant subsequently sued for the balance. . It is not a matter of question for the court after the contract has been made and the promises have been executed. The ships captain, who could not find substitutes, promised the rest of the crew extra wages if they would work the ship back home. Apart from understanding what consideration is, it is equally important to be able to differentiate between an offer and an invitation to treat. The value of the consideration does not have to be adequate. MUST A CONSIDERATION BE ADEQUATE Illustration (f) Section 26 'A' agrees to sell a worth RM1000 for a RM10. The defendants relied on earlier decisions that payment os a smaller sum by a negotiable instrument in discharge of a larger sum was a valid exception to the rule in Pinnels case.The court dismissed this argument and held the defendants liable to pay the balance of the debt. If the court manages to establish this fact then irrespective of the value the court will hold the contract binding. Therefore, in reward cases, for example, a promise to pay a reward when an act is done becomes enforceable only when that act is performed. If the contract is signed under these conditions, it can be challenged in a court of law.
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