The Wonder of the Law: Consideration

Being a working lawyer was not my cup of tea, but I have always admired the majesty and dignity of the law, and I am also fond of the mystery of it. Take: Consideration.

There are three requirements for a valid contract in America: 1) an offer; 2) an acceptance; and 3) consideration on both sides. Simply stated, consideration is the bargained for exchange, you know, you buy a car and your consideration is the money and the other guys consideration is the car. Easy, no?

No. Consideration can be so hard to find that some countries don’t worry about it at all. In Thailand, although we may all agree that almost all Thai contracts show mutual consideration, it is not a requirement for a valid contract. For the Thai courts, if people want to sign a contract that brings them no benefit, who are we to stop them? I have a hunch it’s the same in France, but that’s another story.

The money and the car are easy to see, but it can all become pretty nebulous after that. Take these two examples, if you will:

Example number one: On a large construction project, the price of wood suddenly goes up and the builder insists on altering the contract to reflect the new, higher price of the wood. He orders work to be stopped while the matter is hashed out. The owner agrees to the new price and work continues. The new, substituted contract terms are valid, because there was consideration on both sides.

Example number two: On a large construction project, the price of steel suddenly goes up and the builder insists on altering the contract to reflect the new, higher price of the steel. The builder and the owner sit down to hash things out. The owner agrees to the new price and work continues. The new, substituted contract terms are invalid, because there is no new consideration on the part of the builder.

See the difference? The work stoppage. The builder going back to work is the benefit received by the owner; the builder in example number two never suspended work, so the owner was not receiving any new benefit to offset his higher costs.

Not confusing enough? In some courts, there must be some out there somewhere, the Court would say, wait a minute, you can’t agree to do something that you had a pre-existing duty to do and call it consideration, but that’s courts, they blow hot and cold like that guy in the Aesop fable.

It can be fun to win by convincing a judge or jury that two plus two equals seven; but it is indeed a misery to be beaten by someone proving the same thing. Anyone preferring solid ground under their feet should steer clear of the law as a profession.