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Introduction
Consideration is often defined as some right, interest, profit or benefit accruing to one party or the loss, detriment or responsibility assumed by another party to the contract.
What is consideration?
The basic reason for a contract; a person gives up something of value in exchange for receiving something of value through the contract.
A one-sided promise does not put the other party in any different footing than he or she had prior to the promise.
Types of Consideration
A right A profit An interest A physical object A responsibility undertaken A legal detriment
Legal Detriment
Consideration can also be satisfied through actions. When a person assumes a legal detriment, this can also satisfy the requirement of a consideration.
Detriment
The bargained for exchange" in a contract, where the parties take on some responsibility that they are not legally obligated to undertake
Proving Consideration
When the consideration for a contract is under dispute, the parties involved must devote time and energy in proving (or disproving) the existence of consideration.
Many times, the contract itself will recite the actual consideration.
In many jurisdictions, there are legal presumptions that may also help to establish the existence of consideration.
Written contracts, for example, are often presumed to have consideration, although the other party can rebut this presumption.
As a general rule, there is no requirement that consideration for a contract be recited or expressed in the writing.
Parties are free to negotiate any contract terms that they choose, as long as the contract does not involve fraud, duress or undue influence over one party, or a contract that is void for public policy reasons.
Inadequate consideration is not considered insufficient consideration and therefore will not automatically void a contract.
An unconscionable contract is one in which the terms or bargain is so obviously one-sided that the contract should be voided for public policy reasons.
Under the common law, a contract under seal was presumed to have consideration and therefore no additional evidence or testimony about the consideration was required.
Promissory Estoppel
The basic idea behind estoppel is that when person A makes a statement that person B relies upon, A is prevented from denying the truth of his statement.
What is Estoppel?
When a person is barred by prior actions from claiming a right or a duty against another person who relied, in good faith, on those actions.
Waiver
When a person gives a waiver, he or she surrenders a right, requirement or obligation.