Text 1 Consideration

A contract is usually an agreement in which, in effect, one party says to another, “if you do this for me, I shall do that for you.” Consideration is the promise or action that one person (the promisor) gives in exchange for the promise or action of another person (the promise).

Consideration may consist of some right or benefit to one party — the promisor, or some duty or detriment (cost) to the other party — the promisee. Thus consideration may consist of forbearance — that is, refraining from doing what one has the right to do. Frequently, in simple “fender-bender” accidents, the guilty party pays the innocent party in return for a promise not to sue. Often the payment is made by the wrongdoer’s insurance company. The victim’s forbearance is consideration for the wrongdoer’s payment.

The consideration required to make a promise enforceable may consist of:

1 a return promise

2 an act other than a promise

3 forbearance

4 a change in a legal relation of the parties

5 money

6 property

Consideration is required to make a valid, enforceable contract. It must be mutual (also called reciprocal). This means that each party must give consideration, and each must receive consideration. The presence or absence of consideration is one test of whether a contract has been made. If no consideration is given and received by one of the parties, there may be a moral duty to keep the promise made. However, there is no legal obligation.

A gift is a voluntary transfer of the ownership of property without receiving consideration in return. Property actually transferred by gift cannot be recovered by the donor. The one who received the property by gift has good title or ownership.

Consideration is presumed to exist in contracts under seal. A seal may be any of the following:

1 an impression on the document

2 a paper or wax affixed to the document (perhaps inscribed with a design)

3 the word “Seal” or the letters “L.S.” (an abbreviation for the Latin words meaning “place of the seal”) on the document.

Seals were used long ago when few people could read or write. Such persons who wished to bind themselves to some agreement would affix their seals to the writings. The seal was often a very elaborate wax impression. Sometimes a colorful ribbon was attached. These formalities indicated that the parties intended to be bound. Therefore the old Common law courts did not demand proof that both parties had given and had received consideration. Today, however, the seal is not a substitute for consideration. The seal is still used, but it neither adds to nor takes away from the validity of the contract.

Consideration will be presumed if the promise is made by a merchant, is in writing, and is signed.

Vocabulary

consideration возмещение; встречное удовлетворение

promisor должник по договору (лицо, дающее обещание или обязательство)

promisee кредитор по договору (лиц, которому дают обещание)

return promise ответное обещание

forbearance воздержание от действия; отказ от принятия мер

benefit выгода; польза

donor [‘dəυnə] даритель

seal печать

validity законность

detriment убыток