HI6027 BUSINESS AND CORPORATIONS LAW
Jane has offered Jack to give her Lotus Super 7 sports car without any price when she had decided to go overseas. Jack has accepted this offer. Issue here is whether the consideration exists and is this enforceable agreement?
Sale of Goods Act 1923 No.1
- Part-2 Sec.6 (Sale & Agreement to Sell);
- Part-4 Sec.30 (Duties of Seller and Buyer)
- Part-4 Sec.38 (Acceptance)
Consideration is considered as a price that is demanded by the promiser from the promisee in exchange of either a thing or promise. Consideration can be in the form of money, promise or kind that are agreed to exchange while entering into an agreement. For any agreement to be enforceable agreement, it is must to have consideration where both the parties are required to present what price has been paid for the promise (Paterson, Robertson & Duke, 2009). As per Contract Law, consideration is among the six elements that must exist to make an agreement enforceable. Without any of the six elements below, a contract is not valid and can’t be enforced legally:
- Offer- By promisor
- Acceptance- By Promisee
- Consideration- Price to pay for the promise
- Consent – Willful intention to enter into agreement between the parties
- Legal Capacity- people involved in the contract must be under legal consideration
- Legality of contract- Contract should not be illegal or void
In the situation above, Jane is offering her Lotus Super 7 sports car Jack and it is accepted by Jack. There is no price demanded from Jane in exchange of her car from Jack that indicates no consideration in this situation and therefore enforceable agreement.
As Jane is going overseas, she decides to sell her Lotus Super 7 sports for $25,000 whose market value in the good condition is also around $25,000. Jack accepts this offer. Issue in this case is to identify if consideration exists and is this enforceable agreement?