Section 1 Contracts
Section 2 Federal Securities Acts
Section 3 Secured Transactions
Section 4 Bankruptcy
Section 5 Debtor-Creditor Relationships
Section 6 Agency
Section 7 Regulation of Employment
Section 8 Business Structure
Section 9 Professional and Legal Responsibilities
Section 10 Individual taxation
Section 11 Corporate Taxation
Section 12 Partnership Taxation
Section 13 Transactions in Property
Section 14 Gift and Estate Tax, Trusts And Exempt Organizations, Other Taxation Topics

1.2.6 Consideration

Section 1 ConsiderationConsideration

Generally, in a contact, one party gives money while the other provides goods or services. You may encounter the term “promise to act” which means to render services. Consideration may also include a promise not to act, such as a non-competition agreement.

Consideration must be bargained for, but the courts will not generally look into the amount of money being exchanged as long as the subject matter is legal.

Example: You agree to perform an audit of a client for a flat fee. The assignment takes twice as long as you expected. A demand for more money will not be upheld by the courts.

Past consideration (i.e. consideration for a prior act) is not sufficient for a new contract since it was not bargained for and modification of a contract requires new consideration on both sides to be legally binding.

Please answer the question below and review your answer.

Do this question before reading the next paragraph.

This is perhaps one of the most difficult questions you will encounter.  Don’t try to use common sense. Read the words in bold type in the preceding paragraph and you will get the answer correct. If Zake had agreed to work one extra hour each year, he would have won his case.