Textbook Notes (363,556)
Canada (158,423)
MGSC30H3 (57)
H Laurence (33)
Chapter 8

Chapter 8 Notes

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University of Toronto Scarborough
Management (MGS)
H Laurence

Chapter 8 The Requirement of Consideration NotesConsideration Nature of Consideration y the bargain theory of contract suggests that a contract is essentially an agreement between parties wherein each gets something in return for his or her promise which implies that every promise by an offeror to do something must be conditional y consideration must be something done with respect to the promise offered by the promisor y generally consideration for a promise must exist for the contract to be legally binding Seal as Consideration y seala formal mode of expressing the intention to be bound by a written promise or agreement this expression takes the form of signing or affixing a wax or gummed paper wafer beside the signature or making an engraved impression on the document itself y the original purpose of the seal was to prove the authenticity of the agreement leaving the promisor free to prove the document fraudulent if the seal was not present however as time passed the document became a formal agreement that the courts would enforce if the seal was present Tenders y the tender process usually involves the advertisement of the particular needs of the firm to potential suppliers of the goods or services either by way of newspapers or by direct mail contact y this step in the process is known as calling for tenders and has no binding effect on the firm that makes the call y tenders are frequently used by business firms government organizations and others that wish to establish a contractual relationship for the supply of goods or services or the construction of buildings machinery or equipment y the tendering process generally uses the seal to render an offer irrevocable and often uses the payment of a money deposit as a special type of consideration y as a general rule unless provided to the contrary in the call for tenders an offer made in response to the call may be revoked at any time before acceptance Adequacy of Consideration y in general the courts are not concerned about the adequacy of consideration because they are reluctant to become involved as arbiters of the price or value that a person receives for a promise y apart from the requirement that the consideration be legal their main concern is with the presence or absence of consideration rather than with whether the promisor received proper compensation for his or her promise Past Consideration y to be valid consideration must also be
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