The consideration that benefits the contract for one party (z.B obtaining money) is the burden of the other (z.B payment of money). The rule that the previous review is not well thought out is governed by the exception discussed by the Privy Council in Pao On v Lau Yiu Long. [17] In this case, their masters felt that prior considerations may be a good reflection if: The contracting parties are not obliged to agree on all the terms of a proposed contract before it can be binding. All essential conditions must be agreed upon and the agreement cannot otherwise be uncertain, vague or ambiguous. In exchange, it can be in the form of money, property, promise, services or something else. It can be something as simple as a promise to do or not to do something. For example, if you make a contract with your neighbour, pledging not to sue you for the damage you have caused to his property, and in exchange, you agree to pay him $800, then the $800 is the consideration your neighbour receives, whereas his promise not to sue you is the consideration you receive from the contract. 4. Reciprocity – The contracting parties had a “meeting of minds” on the agreement.

This means that the parties have understood and agreed on the basic content and terms of the contract. In Chappell – Co Ltd/ Nestle Co Ltd (1959), Lord Somervell stated: “A contractor may determine the consideration he chooses. A peppercorn does not stop being good when you notice that the promiseor does not like pepper and will throw the corn. [14] The courts may find that the parties have entered into a binding contract, although certain conditions remain to be agreed. However, in the absence of words, they must be able to be implied by the court – the court must be able to fill in the gaps. In some cases, the court may be able to infer a standard of adequacy, either on the basis of common law or status. The examination in a contract is the exchange of values by each party. Most of the time, services or goods are exchanged or promised in a contract, although the parties may consider whatever the parties agree. Examples: Do you have a problem with a contract that you have problems to solve? Does a technical point in your contract prevent you from doing what you want? Candy company ChocoTime enters into a contract with Cocoa Merchants, in which ChocoTime all the cocoa it needs for its candy from The Cocoa Merchants, and Cocoa Merchants will sell as much cocoa as the will of chocoTime.

Since this contract binds ChocoTime to the purchase of all the cocoa it only needs for cocoa traders, ChocoTime is not obliged to do anything. Cocoa traders could decide not to sell cocoa to ChocoTime if desired. It is a kind of illusory commitment and, therefore, it renders this treaty invalid and unenforceable. The consideration in the contracts relates to the benefit that each party receives in exchange for what it abandons in the contract. This is an essential element that must be included in a treaty in order to make it legally binding on the parties. An oral or written contract becomes invalid in the absence of consideration. The thinking can be as big or small as the parties agree on an exchange between them. For example, if you are going to buy a dress, it is between you and the seller to agree the price. Where there is a valid consideration, the courts rarely interfere in deciding whether the agreement is unfair or disproportionate.

However, if a party is misled into an unfair agreement by concealing certain important information or by acting otherwise in bad faith, this may undermine the legal validity of the treaty.