Consideration - Part 1 (Contract Formation)- FS

Question 1

What is consideration in contract law?

Answer 1

Consideration is the price paid by one party in return for the promise of the other. It reflects the exchange of benefit and burden, and is necessary to make a promise legally enforceable.

Question 2

What is the difference between executed and executory consideration?

Answer 2

• Executory consideration: A promise to do something in the future (e.g. to pay money).
• Executed consideration: A promise that has already been performed (e.g. payment made).

Question 3

What is the rule regarding the sufficiency and adequacy of consideration?

Answer 3

Consideration must be sufficient (i.e. have some value in the eyes of the law), but need not be adequate (i.e. equal to the market value of what is being exchanged).

Question 4

Can a person enforce a contract if they have not provided consideration?

Answer 4

No. Only a party who has provided consideration can enforce a contract. This is linked to the doctrine of privity.

Question 5

Why is past consideration generally not valid?

Answer 5

Because it was not given in exchange for the promise. Acts done before a promise are not valid consideration unless specific exceptions apply.

Question 6

What are the three conditions for valid past consideration?

Answer 6

1. The act was done at the promisor’s request.
2. There was a mutual understanding that payment or benefit would be given.
3. The act would have been legally enforceable had the promise been made in advance.

Question 7

Can nominal consideration be valid in forming a contract?

Answer 7

Yes. Even consideration of low value (e.g. £1 for a valuable item) is valid if it has legal value, regardless of fairness.

Question 8

A man agrees to sell a bicycle worth £390 to a woman for £25. No payment has been made yet. Is the agreement binding?

Answer 8

Yes, because sufficient consideration has been promised. Consideration is valid from the moment the promise is made, not when it is performed