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Agreement Without Consideration is Valid When…

Agreements without consideration are often viewed as unenforceable and invalid in common law. However, there are a few exceptions where agreements without consideration can still be valid. In this article, we will explore some of the circumstances where agreements without consideration can be binding.

What is Consideration in Contract Law?

Before we dive into the exceptions, let us first understand what consideration is in contract law. Consideration refers to something of value that is promised in exchange for a promise made by the other party. It could be a promise to perform an act, refrain from an action, provide goods or services, or pay money, among others. Consideration is what makes a contract legally binding and enforceable.

Exceptions to the Rule

1. Past Consideration

In some cases, past consideration is deemed sufficient to make an agreement enforceable. This refers to a situation where one party has already performed a service or action for the other party, and the latter subsequently promises to pay for it. For instance, if you help your neighbor move into their new home, and they offer to pay you a sum of money, this would be an example of past consideration.

2. Promissory Estoppel

Promissory estoppel is another exception to the rule of consideration. It arises where one party makes a promise to another, and the latter relies on the promise to their detriment. If it would be unconscionable to allow the promisor to go back on their promise, the promise becomes binding even in the absence of consideration. For instance, if a father promises to pay his son`s college fees, and the son relies on that promise to attend college, the father would be estopped from reneging on his promise.

3. Contracts Under Seal

Contracts under seal are a type of contract that does not require consideration to be binding. A contract under seal is a formal agreement that is signed, sealed, and delivered by the parties involved. The act of sealing the contract is considered sufficient consideration, and the contract is therefore enforceable even without additional consideration.

Conclusion

In conclusion, while consideration is a vital component in contract law, there are a few exceptions where agreements without consideration can still be valid. These include past consideration, promissory estoppel, and contracts under seal. It`s essential to note that these exceptions are limited, and parties should always aim to include consideration in their contracts to avoid future disputes and uncertainties.