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Consideration - Business Law
 
Consideration

For any contract to be valid, consideration is needed. Consideration is the benefit or detriment in the exchange process. If X goes to the shop to buy a bag of rice. And he takes it to the cashier. X pays the money for the bag of rice. He looses his money but gains a bag of rice. The shop on the other hand looses the bag of rice but gains the money.

Consideration need not be adequate and has to be nominal. A peppercorn is still a peppercorn.  So if Y sells his book for Rm 1.00 and the book actually cost Rm 200.00. By paying Y Rm 1.00 and he accepts, then a contract exists.

If someone agrees to sell you a piece of property for Rm 300,000.00 and you pay a deposit of Rm 1,000.00, a contract exists. If you cannot pay the balance of the purchase money, then the seller has the right to forfeit the Rm 1000.00 deposit.

If the seller refuses to sell the property to you, then you can sue him for breach of contract. Apply to the court for Specific Performance to force him to sell you the house.

Past Consideration is not consideration.

Eastwood v Kenyon

Eastwood gave his own money to a minor who was his ward. He was the administrator of her father's estate. Later she promised to pay him back all the money he had given to her while she was a minor.

Held :  this was past consideration and was not consideration. She did not have to pay him back. After all he was her guardian and was responsible for her up bringing.

Roscorla v Thomas.

Roscorla went to a horse auction. Bought the horse and then after paying the money he asked the owner whether it was a good horse. The owner replied," The best horse I have had". The next day Roscorla found the horse to be bad tempered and crazy. He sued the h ...
 
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