Consideration and Counter Offer

Consideration and Counter Offer

Question 1

Introduction

This question addresses the concept of consideration and analyzes the statement that “An Agreement without consideration is void. This statement holds true but there are certain exceptions to this rule that will be discussed in the following section.

Concept of Consideration

The doctrine of consideration holds that, standing alone, a promise is categorically insufficient to generate an expectation-based enforceable contractual obligation, no matter how seriously and unconditionally it is intended or how carefully and deliberately it is made, and despite the fact that it may be recorded in writing or memorialized in some other way. To be enforceable according to its terms, a promise must be made in return for a legally valid consideration that can be either a reciprocal promise or act that is requested by the promisor and provided by the promise in return as part of a single transaction (Heffey,Paterson,2002,112-134). Where the consideration is a counter-promise, there is a bilateral contract formed at the moment the mutual promises are made (Graw,2005,9-11). If the consideration is a reciprocal act, a unilateral contract is formed when the act is executed. Consideration is not the same as just any motive or reason for the promise; it must move from the promisee; and it must be of some value in the eye of the law. Understood in this way, consideration is unequivocally a necessary condition of contract formation and enforceability (Andrews,2011,8-17).

It will by no means an acceptance, which could be deducted (especially if requesting a change on one point, he accepts all other elements of the contract), because the contents of the contract cannot be determined. However, the contract can only be formed if both parties engage in the same terms, that is to say that the contract binding the parties must have the same content. Even the most influential defenses have been found wanting (Andrews,2011,8-17). When consideration is not simply dismissed as an out-dated and rigid formalism that obscures the real concerns and purposes of contract law, functions are attributed to it that it does not fulfill in central instances of its proper application and that can often be more effectively promoted by other legal devices (such as the seal) or other reasons for liability (such as reliance). It is now commonplace to see consideration, insofar as it is still treated as a prerequisite for enforceability, as a control device that excludes promises for reasons that often promote neither autonomy nor welfare (Heffey,Paterson,2002,112-134).

The contract will exist when there is an agreement, consisting of an offer and acceptance, consideration and intention to create a legal relationship. However, in a deed, no consideration is required - the advice of a solicitor, notary's equivalent of civil law countries is intended as relevant consideration (Ricks,2001,16-21).

In the Malaysian contract law, section 27 (a), says that the specific performance of the contact cannot be enforced against another party if the consideration received by him is inadequate either by itself or other circumstanced. Under the Malaysian contract law 1950, all the agreements ...