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Wilfrid Laurier University
Daniel J Fife

1READING NOTESChapter 6 Formation of a Contract Consideration and IntentionBefore an agreement is binding in law certain essential elements must be present primarily there must be consideration can be replaced thoughThe Meaning of ConsiderationIn a unilateral contract the price paid for the offerors promise is the act done by the offereeIn a bilateral contract the price paid for each partys promise is the promise of the otherThis price is called consideration price for which the promise is boughtoCan range from a number of dollars to a single stapleGratuitous PromisesConsideration is essential to make a contract bindingoA person can still make a promise to another without bargaining for anything in returnoSuch a promise made in the absence of a bargainprice is called a gratuitous promise and does not become a contract nor is it enforceable by lawoMade void by lack of consideration Never was a contractLaw simply states that if the promisor does not perform the promise has no legal remedy cannot seek compensation for disappointed expectationsoCan donors later change their mind and demand gift back on grounds of lack of consideration No it is no longer their property unless there was undue influenceAdequacy of ConsiderationConsideration must have some value in the eyes of the law but the court will not inquire into whether the promisor has made a good bargainoCourts take this stance because evaluating the adequacy requires a personal value judgment no longer impartialCourts will only ever examine adequacy in instances where consideration is grossly inadequate pointing to fraud or undue influence exerted on promisorCan become a slippery slopeoEg A promise not to sue someone whos damaged your car in order to force them into paying you can be seen as consideration in a unilateral contract after a car crashPast ConsiderationRemember consideration is the price that makes the promisors promise bindingThe reason for making the promise motive is irrelevantoFor example motive cannot change a gratuitous promise into a binding contract nor reduce a binding promise into voluntary obligation
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