BUS311_chapter_04

If your mother promises you 1000 at the end of the

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Unformatted text preview: at there generally must be consideration flowing in both directions. However, sometimes there are things that at first look seem to be consideration, but legally don’t qualify. This category includes past consideration, preexisting legal duties, and illusory promises. Also, note that some promises are simply too vague to qualify. If Darrel promises Jane a diamond ring in three months’ time, in exchange for her love and affection, there is no consideration. If your mother promises you $1,000 at the end of the semester if you will be a good boy/girl this term, it might sound like a unilateral offer to you, but in fact you will not be giving consideration. What Mom thinks is good may not be the same as what you consider being good! Past Consideration If a benefit has already been given, there is no present bargained-for exchange, and thus no consideration and no binding agreement. Consider the following: Example 4.25. Helen, the owner of ABC Company, wishes to reward the loyal service of Matthew, an employee. She drafts an agreement that reads as follows: “In consideration of Matthew’s faithful service to ABC Company throughout the past thirty years, ABC Company hereby promises to pay to Matthew a yearly pension of $20,000 per year.” Matthew accepts. Example 4.26. Yin, grateful for Mark having saved his life, tells him: “In consideration of your bravery in rescuing me from the path of an oncoming truck, I promise to give you $50,000.” Mark accepts. In both of the above examples, past consideration is given and there is no contract. In reality, Helen and Yin want to make a gift to reward past service and gift promises are not enforceable. Matthew’s 30 years of faithful service are certainly valuable, as is Mark’s good deed. But there is no exchange involved in these situations, since the benefits from Matthew and Mark have already been given without any bargaining. rog80328_04_c04_062-088.indd 79 10/26/12 5:42 PM Section 4.4 Consideration CHAPTER 4 In the Media: Allen Iverson: “The Answer” to the Question Ab...
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