In general, courts do not ask whether the agreement between two parties was financially fair – only that each party passed on a legal obligation or obligation to the other party. [29] [30] The decisive issue is the existence of considerations, not the appropriateness of the recital. It is not necessary that the values between the counterparties transferred by each Contracting Party be comparable. If A signs a contract with B so that A cancels B`s house for $500, A`s consideration is the service of painting B`s house, and B`s consideration is $500 paid to A. If A signs a contract with B so that A does not paint his own house in a color other than white and B pays $500 a year to A to maintain that agreement, there is also a consideration. Although A did not promise to do anything in the affirmative, A promised not to do something he was allowed to do, and so A passed the consideration. As consideration for B is the indulgence to paint one`s own home in a color other than white, and B`s consideration for A is $500 per year. Conversely, if A signs a contract to buy a car from B for $0, B`s counterpart is still the car, but A gives no consideration, and so there is no valid contract. However, if B still gives the title of the car to A, B will not be able to take back the car because although it is not a valid contract, it is a valid gift. In Currie v.
Misa [1], the court stated that consideration was a « right, interest, profit, advantage or abstention, disadvantage, loss, liability ». Thus, consideration is a promise of something of value given by a promisor in exchange for something of value given by a promisor; and generally, the thing that has value is a good, money or a stock. Clemency, like that of an adult who promises to abstain from smoking, is enforceable only if a legal right is waived. [2] [3] [4] However, some courts in the United States may qualify for nominal consideration or virtually zero consideration. Some courts have since considered this a deception. Since contractual disputes are usually resolved by a state court, some state courts have concluded that the mere provision of $1 to another is not a sufficient legal obligation and that, therefore, no legal consideration is given in this type of business and, therefore, no contract is concluded. However, this is a minority position. [31] A transaction is supposed to include nominal consideration if the parties make each of the promises in the form of a negotiation, but neither party considers their promise to be the price they pay for the promise they receive. In other words, the nominal counterparty looks like a good deal and sounds like a good deal, but it`s not really a good deal. For example: The other type of illusory promise is contained in contracts that allow one party to terminate the contract at will and without informing the other party.
For example: There are two types of illusory promises. The first is where he promises to do something only when he wants to. Example: The same applies if the consideration is a service that the parties had previously contractually agreed. For example, A agrees to cancel B`s house for $500, but halfway through work, A tells B that he won`t finish unless B increases the payment to $750. If B agrees and A then leaves the job, B A will only have to pay the $500 originally agreed, as A was already contractually obligated to cancel the house for that amount. Nominal consideration: A consideration so insignificant that it is disproportionate to the value of what is exchanged. Since an illusory promise constitutes a contract in which only one party must be performed, an illusory promise is not a valid consideration and none of the parties to a contract containing an illusory promise is bound by the contract. The illusory promisor is not bound because he has not made a commitment (nothing he has promised actually limits his future options). The true promisor is not bound because he received an illusory promise in exchange for his true promise, and since an illusory promise is not a quid pro quo, no enforceable contract has been falsified. The general rule is that when one party makes an illusory promise in exchange for the true promise of another, no party is bound.
An exception to this rule is when there is an obligation to a third party. An action taken before making a promise to make a payment or provide another service can sometimes be in exchange for the promise. For this to be the case, three conditions must be met (Pao On v Lau Yiu Long [1980]): Article 2-309 of the UCC requires that reasonable notice be given before the termination of a contract and that any contract that does not require notification be invalid if its performance would be unscrupulous. 1. Offer – One of the parties has promised to take or refrain from taking certain measures in the future. 2. Consideration – Something of value has been promised in exchange for the specified share or non-action. This can take the form of a significant expenditure of money or effort, a promise to provide a service, an agreement not to do something, or a trust in the promise. Consideration is the value that leads the parties to enter into the contract. At common law, it is essential that both parties offer consideration before a contract can be considered binding. The doctrine of consideration is not relevant in many jurisdictions, although contemporary relations with commercial disputes have viewed the relationship between a promise and an act as a reflection of the nature of contractual considerations. .