Business Law: Consideration, Sufficiency, and Adequacy Report

This report delves into the crucial role of consideration within the framework of business law, emphasizing its significance in forming valid contracts. It highlights that consideration, which can encompass various forms, must hold legal value to be enforceable. The report further explores the distinction between sufficient and adequate consideration, referencing case law like Chappell v Nestle (1960) AC 87 and Stilk v Myrrick (1809) EWHC KB J58 to illustrate key concepts. The report concludes that consideration forms the bedrock of every contract, with a discussion on the essential elements for its validity and the consequences of its absence. The report examines the essential aspects of consideration, including its real and practical nature, along with the expectations of parties within an agreement. It also outlines the implications for failure to meet expectations and the importance of valid consideration.

Business Law
Running Head: BUSINESS LAW 0
Student’s Name
Consideration

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Contents
Introduction......................................................................................................................................2
Importance of Consideration in a contract.......................................................................................2
Difference between Sufficient and adequate consideration.............................................................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

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Introduction
Consideration is one of the important factors which are necessary to convert an
agreement into a contract. In a contract there are two or more parties which exchange promises
to each other to get something in return, this something is termed as “consideration”.
Consideration must have some value in view of law.
Importance of Consideration in a contract
As per contract law, agreements which are made out to love and affection cannot become
contract ever, as such consideration are merely promises which are not forcible. As major parties
are required for a valid contract, same as, proper consideration is also a requisite for the same.
Consideration is a very important element, as it defines liability of both of the parties of an
agreement. A consideration can be anything; it can be a promise of doing a task or not to do that.
But it has some value in the eye of second party as well as in eye of law (E-lawresources, 2018).
If consideration would not be an essential element for contract, almost every promise between
individual would have become contract.
Consideration is a factor in contract, which motivates parties to perform their promises.
When two parties decides to do a task, they both need to perform some promises for each other
according to deal made in between. It can say that such promises of one party are consideration
for other one (Klass, 2010).
Consideration in a contract must have it is essential elements. It must be real and
practical. In the case of Stilk v Myrrick (1809) EWHC KB J58 it was adhered that Consideration

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must be something apart from the present liability of the parties. It must bring new duties to
parties of an agreement.
Consideration explains the expectation of parties from each other. In case of failure to
fulfill such expectations, parties can initiate proceedings against defaulting parties. But for this it
is required that such consideration must always be valid. A proper consideration can neither
invalid nor illegal. If in case an agreement, there is some consideration but if the same is not
valid then, such agreement cannot become contract.
If an agreement, consideration would not be there, then none of the parties shall be able
to claim anything from such arrangement.
Difference between Sufficient and adequate consideration
Both these terms such as sufficiency and adequacy sounds similar, yet there are some
difference in between them. Sufficient consideration is a consideration which has some value,
may be not exactly what it should be. Whereas adequate consideration means the exact amount
what should be there in exchange of promise.
It was held in the case Chappell v Nestle (1960) AC 87 that in a contract consideration
must be sufficient but it need not to be adequate always.
Conclusion
On the basis of this report, this can be concluded that consideration is the basis of every
contract. Without the sufficient consideration, an agreement cannot turn to a contract.

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Consideration can be anything but must have a legal value in the eyes of law. Such consideration
must be actual a valid.

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References
Chappell v Nestle (1960) AC 87
e-lawresources (2018). Contract Consideration. Retrieved from:
http://e-lawresources.co.uk/Consideration.php
Klass, G. (2010). Contract Law in the USA. The Netherlads: Kluwer Law International.
Stilk v Myrrick (1809) EWHC KB J58