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Contract law
Consideration
All simple contracts must be supported by consideration. However, contracts made
by deed (specialty contracts) do not require consideration unless the terms of the
agreement require it.
Consideration is an act or forbearance (or the promise of it) on the part
of one party to a contract as the price of the promise made to him by
the other party to the contract. DUNLOP PNEUMATIC TYRE CO. v
SELFRIDGE 1915
Put more simply, it is the price by which one party bought the other
party’s act or promise.
Valid consideration
Both executed and executory consideration is capable of being valid consideration.
Executed consideration
Executed consideration is consideration provided at the time of the agreement. It is a
performed act in exchange for a promise.
Executory consideration
Executory consideration is provided when the party agrees to do something in the
future at the time of the agreement. It is a promise given in exchange for a promise.
Sufficient but not adequate
Consideration must be sufficient but need not be adequate.
Sufficient consideration is consideration which is capable of being given a
value.
Inadequate consideration is unequal consideration. The parties have freedom
to contract under any terms they wish and a court will not attempt to make a
contract a fair bargain as long as there is some identifiable value.
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