I am the manager of a new delivery service and I am currently writing up a contract agreement for a delivery service to provide delivery services to takeaways in the Watford area.
I have done some reading into contract law and I came across the principle of consideration. Initially to get the takeaways on board, they will not be paying for our services, so am I right in say that there will be no consideration in this contract?
Would that make the contract void, as I read that consideration is needed for a contract to be valid.
Can you explain what is consideration and how it works under contract law?
The Answer from Solicitors Online
What is consideration in contract law?
Consideration is a key requirement of having a valid legal contract. Without consideration it is impossible for a valid legal contract to be put in place.
What is consideration?
Consideration is something which represents either some benefit to the person making the promise in the contract or some detriment to the person to whom the promise is made. The most popular form of consideration is the payment of money.
Consideration is given in return for a promise by the other party to do something. For example an agreement between a buyer and seller for the sale of car is based on the promise that the seller will hand over ownership of the car to the buyer, for this promise the buyer gives consideration in the form of money.
Consideration given after the promises have been made
Consideration is given for promises made during creation of the contract. After the transaction has taken place and the contract has been fulfilled, the seller cannot be liable for new promises that are made. For example if a seller sells a car to a buyer, the buyer makes payment, the contract will be regarded as having been fulfilled.
If the seller later tells the buyer that the car will not need any repairs for the next 5 years, the seller will not be liable for this promise. As this promise was made after the sale was completed and after the money had been paid.
Consideration going from buyer to seller
Consideration must go from the buyer to the seller for a valid contract to be in place. For example if a buyer of a car was meant to give payment to the seller, but gave payment to the seller’s brother then no valid contract will be in place for sale of the car, as the law requires that consideration goes directly to the seller, unless of course part of the agreement included that the seller’s brother will be the one to collect payment.
If you need legal advice on the topic of consideration in contract in contract law, you can get legal advice online from our Solicitors online right now.