Law of Consideration

A History of Contract Law (in note form)

Submitted by LearningLaw on Wed, 10/08/2008 - 17:39

Contract Law is one of the seven pillars of foundation in law. Which is why is it important to get a grasp on it early on.

Without contract laws it would be very difficult to do any business. Companies would have to pay large sums of money because nobody trusts each other. People would only do business with people they knew very well. We would not get very much done. A contract allows each party a way to do business. A legally binding document for all parties to meet there obligations.

Contracts are used in all areas of society for the transfer of goods, letters of loan, payments, employment etc. It could be summarised in the expression "the one fact of human existence is contracts".

Contracts are controlled (mostly) by 2 sorts of legal systems:

Civil and common law system

The difference explained between them below is from Wikipedia

There are six essential elements necessary for legally binding contract formation: (1) an agreement (offer and acceptance); (2) consideration (generally, the supply of money, property or services however anything will suffice as consideration be it money, or a promise to undertake, or not undertake a particular act); (3) Capacity to enter legal relations. E.g. Of sound mind and legal age (4) Intention by the parties to enter into legal relations (private non-commercial agreements between family members may not necessarily constitute a contract as intention to create legal relations is often not present) and (5) Formalities - In most jurisdictions contracts do not need to be represented in writing however exceptions apply. (6) Certainty.

The foundation of the legal relations called contract is the agreement of the parties. In order for an agreement to be a contract (or a variation to an existing contract) it must be supported by consideration. The agreement must also be sufficiently certain and complete to be enforced in the courts and the parties must have intended their agreement to be a contract. The absence of any of these elements will signify either that there is in law no agreement or that the agreement is not enforceable as a contract.

Because not all contracts can be enforced by a legal system, rules must exist to govern contracts and the parties going into them. The rules will help to identify which contracts are enforceable by law and which ones are not enforceable by law. Consideration is the main part of what distinguishes gifts (gratuitous legal acts) from contracts. Consideration has four rules governing it: 1) consideration must be sufficient, though it doesnt need to be adequate (adequate meaning having any economic value, though this has