Business Law Study Set 1

Business

Quiz 15 :
Consideration

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Quiz 15 :
Consideration

Consideration is a value given up by both parties. Most contracts require consideration in order to be enforceable. Past consideration is an act done in the past is not considered as consideration, hence not enforceable. True consideration should be current or in the near future. In this case, O saved S house when it caught on fire. After the fact, S promised O payment of the act. The act of saving the house is past consideration. The promise will not be enforceable.

Facts of the case: WS has promised his nephew that he will pay an amount of S5,000 if he left playing cards, swearing and using tobacco until he attains an age of 21. The nephew on giving up this asked his uncle for payment of an amount. Before fulfilling his promise, his uncle died. The estate of uncle denied making the payment claiming it was no consideration. Consideration: It need not be monetary value that benefits the victim all the time. Consideration can be an interest, loan, or good or service that is to be paid to the borrower's promise to repay to the principle. In the present scenario, consideration is ceasing oneself from bad habits like smoking, boozing, etc. WS has acknowledged ceasing habits as consideration and agreed to save money against paying amount. The nephew entitles to claim this consideration as WS has denied making payment. The theory of consideration here is "benefit- detriment theory" which means the contract must either be of benefit to promisor or to the detriment to the promisee". According to the theory, any damages of right will be sufficiently sustained to hold promise. In this case, the nephew abandons his rights towards tobacco and gambling. He was restricted from his freedom. As he is bad at his part, the court will consider WS's agreement. Hence, it can be agreed to the fact the court would uphold the agreement.

Facts: DY (plaintiff) was employed by National INC (defendant). DY lost his right foot on a job-related accident. DY claimed National made an oral agreement that if he was not to sue them, he would have a lifetime job. National denied this fact. National later laid off DY stating that DY originally did not have the right to sue as even without the oral agreement he can only receive worker's compensation. Thus, it was a forbearance of a doubtful right and can't be considered as consideration for their promise of employment. DY sued for breach of contract. Here in this case scenario it can be said that the agreement is binding as the plaintiff has given up his legal right for the promise to other in the contract. In this situation it was found that forbearance of doubtful right can be considered as consideration. therefore, there was a consideration in this contract hence the agreement is said to binding.

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