Another good consideration for the promise is to settle a dispute. If, as part of the promise, a party waives legal rights, this may also be an appropriate consideration for the promisor. For example, abstaining from gambling, smoking or drinking could cause the other party to pay money to the person who refrains from doing so. Example: If A promises to sell a house worth INR. 500,000 for INR. Only 50,000, the insufficiency of the price in itself does not entail the nullity of the transaction. However, if a party alleges coercion, undue influence or fraud, insufficient consideration is also evidence that must be investigated. Peter took out a loan from his friend John. However, he has not yet repaid the loan. John promises not to sue Peter if he promises to repay the loan within a week. In this case, John`s abstinence is due to the consideration of Peter`s promise to repay the loan. Consideration can be thought of as the notion of value offered and accepted by persons or entities entering into contracts. Anything that one party promises to the other when entering into a contract can be treated as “consideration”: for example, if A signs a contract to purchase B`s car for $5,000, A`s consideration is $5,000 and B`s consideration is the car.
To this end, we focus on the consideration or exchange of negotiated promises between two or more parties. Example: A agrees to sell a horse worth 1,000 rupees for 10 rupees. Denied that his consent to the agreement was given voluntarily. Insufficient consideration is a factor that the Court should take into account when assessing whether A`s consent was given voluntarily or not. Suppose A is a screenwriter and B runs a film production company. A said to B, “Buy my script.” B says, “How about that – I`m going to pay you $5,000 to let someone else produce your film in a year. If I produce your film this year, I will give you another $50,000, and no one else will be able to produce it. If I don`t produce your film this year, you can leave. If the two then conflict, the question of whether a contract exists is resolved.
B had an option contract – he could decide whether or not to produce the script. B`s consideration was the $5,000 down payment and the $50,000 possibility. A`s idea was exclusive rights to the script for at least a year. The value of the exchange must be legally sufficient. This means, among other things, that the consideration of each party must be of equal value. In our example, the $295 fee and the work done to repair the toilet were about the same, so the consideration is legally sufficient and the contract is valid. The consideration must also be negotiated. This means that both parties must agree to give up something as part of the contract.
In our example, Mr. Smith forfeited $295 and Ms. Jones donated her time and expertise in plumbing. According to contract law, there must be consideration and bring both advantages and disadvantages to both parties. In the present case, only Pollard benefited from the new anti-competitive agreement. Labriola agreed to essentially the same terms of the original contract: salary and commission, arbitrary employment, and non-competition. No new obligations have arisen for the employer either. In fact, Pollard added a new clause requiring Labriola to pay all attorneys` fees and costs in the event of a contract dispute.
The consideration need not be appropriate or equivalent to the promise. All that is needed is for an agreement to be supported by a counterparty and for the parties to be free to determine the appropriate consideration for a promise at the time of the transaction. The same applies if the consideration is a service that the parties had previously agreed contractually on. 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 quits his job, B still only has to pay A the $500 originally agreed, because A was already contractually obligated to paint the house for that amount. Under section 2(d) of the Indian Contracts Act, 1872, considerations are considered valid if they have the following characteristics: Example: A granted an estate to B and ordered him to make an annual payment to A`s brother. By an agreement reached the same day with A`s brother, B promised to carry out A`s instructions. Subsequently, B refused to make payment to A`s brother on the ground that there had been no consideration from A`s brother. The Court found that sufficient account had been taken of B`s promise to A`s brother, since in India the consideration does not necessarily have to be based on the promise, but can come from any other person.
If the promisor has no objections, the consideration may be transferred to a third party after legal review. For example, A B can grant a house for rent and order B to pay X for it. If B refuses to pay it to X, the case could go to court and force B to pay X because there is enough consideration from A to make the payment to X. The consideration must have some value before the law. Value also refers to whether or not the law determines whether or not the party`s consent is given with its own will. An example of a consideration that has value in the eyes of the law is when a woman agrees to withdraw her lawsuit against her husband if the husband is willing to pay her monthly alimony.