Consideration And Deeds

• Published date: 04 July 2023
• Subject Matter: Corporate/Commercial Law, Employment and HR, Corporate and Company Law, Contract of Employment
• Law Firm: REVERA
• Author: Mr Mikalai Harelik

Today English law becomes common for practitioners outside of the United Kingdom due to its flexibility and widespread around the world. In this article we will briefly describe two issues, which, among others, interest those who start working with English law: consideration and deed.

In English law there are two main types of contracts that are used to conclude deals and establish legal obligations: contracts by deed and simple contracts. Both types of contracts although being alike have their own unique characteristics which can affect the validity and strength of legal obligations.

To start, it is important to note that all agreements in English law are categorized as either binding or non-binding. Binding agreements, in its turn, are further classified as either simple contracts or contracts by deed.

Simple contracts consists of five essential elements: 1) offer - a specific proposal to enter into an agreement; 2) acceptance - the act of agreeing to the terms proposed by another party as presented in an offer; 3) consideration -value exchanged between the parties; 4) intention to create legal relations; 5) certainty of terms.

Elements numbered 1, 2, 4, and 5 do not significantly differ across various legal jurisdictions, and their general principles are familiar to lawyers worldwide. However, the doctrine of considerationhas own specific features in English law.

The principle of consideration states that a promise to perform an obligation considered gratuitous and unenforceable unless it involves some form of reciprocal service or benefit provided by the party to whom the promise was made. The party receiving the promise to perform in their favor must assume all risks associated with material or legal detriment, or the offeror must receive some benefit in return for promise. For a contract to be legally binding and valid, each party must provide something valuable (consideration) in exchange for receiving something else. In other words, both parties must contribute or provide something of value within the framework of the contract.

Meaning

Consideration is the valuable thing that is a benefit to one party (the debtor) and a detriment to the other (the creditor). Consideration can also be described as "...some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other..." (Court decision in Carrie v. Misa, 1875). This particular definition from the court...