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iations such as presenting goods to a cashier the offer will be presumed to be on the terms of the invitation to treat consideration edit main article consideration in common law jurisdictions consideration is required for simple contracts but not for special contracts contracts by deed the court in currie v misa 67 declared consideration to be a right interest profit benefit or forbearance detriment loss responsibility thus consideration is a promise of something of value given by a promissor in exchange for something of value given by a promisee and typically the thing of value is goods money or an act forbearance to act such as an adult promising to refrain from smoking is enforceable only if one is thereby surrendering a legal right 68 69 70 in dunlop v selfridge lord dunedin described consideration the price for which the promise of the other is bought 71 rules applicable to consideration edit according to section 2d of the indian contract act 1872 valid consideration exists when when at the desire of the promisor the promisee or any other person has done or abstained from doing or does or abstains from doing or promises to do or abstain from doing something 72 or in other words when each party receives something in return for entering into a contractual obligation an agreement must be supported by a lawful consideration on both sides under the act valid consideration must satisfy the following criteria it must move at the desire of the promisor an act constituting consideration must have been done at the desire or request of the promisor if it is done at the instance of a third party or without the desire of the promisor it will not be good consideration for example a saves b s goods from fire without being ask him to do so a cannot demand payment for his service consideration may move from the promisee or any other person under indian law consideration may be from the promisee of any other person i e even a stranger this means that as long as there is consideration for the promisee it is immaterial who has furnished it consideration must be an act abstinence or forbearance or a returned promise consideration may be past present or future past consideration is not consideration according to english law however it is a consideration as per indian law example of past consideration is a renders some service to b at latter s desire after a month b promises to compensate a for service rendered to him earlier when consideration is given simultaneously with promise it is said to be present consideration for example a receives rs 50 in return for which he promises to deliver certain goods to b the money a receives is the present consideration when consideration to one party to other is to pass subsequently to the maker of the contract is said to be future consideration for example a promises to deliver certain goods to b after a week b promises to pay the price after a fortnight such consideration is future consideration must be real consideration must be real competent and having some value in the eyes of law for example a promises to put life to b s dead wife if b pay him rs 1000 a s promise is physically impossible of performance hence there is no real consideration consideration must be something which the promisor is not already bound to do a promise to do something what one is already bound to do either by law is not a good consideration since it adds nothing to the previous existing legal consideration consideration need not be adequate consideration need not necessarily be equal in value to something given so long as consideration exists the courts are not concerned as to adequacy provided it is for some value additionally under the indian contract act 1872 any consideration is invalid if it is forbidden by law c it involves injury to a person or property of another d courts regards it as immoral it is of such nature that if permitted it would defeat the provisions of any law it is fraudulent or involves or implies injury to the person or property of another or it is opposed to public policy e the consideration conveyed by at least one side seeks to restrain legal proceedings f the consideration includes public offices or titles g the consideration involves involuntary labour or otherwise infringes upon the personal liberty of a party to the contract h the consideration includes a marriage or a pecuniary inducement to marry in common law jurisdictions other than those in the indian subcontinent consideration cannot include a debt or obligation that is already owed the insufficiency of past consideration is related to the pre existing duty rule for example in the early english case of eastwood v kenyon 1840 the guardian of a young girl took out a loan to educate her after she was married her husband promised to pay the debt but the loan was determined to be past consideration in the early english case of stilk v myrick 1809 a captain promised to divide the wages of two deserters among the remaining crew if they agreed to sail home short handed however this promise was found unenforceable as the crew were already contracted to sail the ship the pre existing duty rule also extends to general legal duties for example a promise to refrain from committing a tort or crime is not sufficient 74 the doctrine of consideration does not exist outside common law jurisdictions and within common law jurisdictions does not apply to contracts made by deed similarly under the uniform commercial code firm offers in most american jurisdictions are valid and binding without consideration if signed by the offeror and are irrevocable for the time stated on the purchase order but no longer than three months or if no time is stated for a reasonable time 75 criticism edit the primary criticism of the doctrine of consideration is that in its present form it is purely a formality that merely serves to complicate commerce and create legal uncertainty by opening up otherwise simple contracts to scrutiny as to whether the consideration purportedly tendered satisfies the requirements of the law while the purpose of the doctrine was ostensibly to protect parties seeking to void oppressive contracts this is currently accomplished through the use of a sophisticated variety of defences available to the party seeking to void a contract in practice the doctrine of consideration has resulted in a phenomenon similar to that of ḥiyal in islamic contracts whereby parties to a contract use technicalities to satisfy requirements while in fact circumventing them in practice typically this is in the form of peppercorn consideration i e consideration that is negligible but still satisfies the requirements of law i the doctrine of consideration is expressly rejected by the unidroit principles of international commercial contracts on the grounds that it yields uncertainty and unnecessary litigation thereby hindering international trade 4 similarly the united nations convention on contracts for the international sale of goods similarly does not require consideration for a contract to be valid thereby excluding the doctrine with regard to contracts covered by the convention even in common law jurisdictions where it would otherwise apply consequently the continued existence of the doctrine in common law jurisdictions is controversial scots lawyer harvey mcgregor s contract code a law commission sponsored proposal to both unite and codify english and scots law proposed the abolition of consideration some commentators have suggested that consideration be replaced by estoppel as a basis for contracts 77 however any change to the doctrine of consideration in the jurisdictions in which it exists would need to implemented by legislation j requirement of writing edit main article statute of frauds a contract is often evidenced in writing or by deed the general rule is that a person who signs a contractual document will be bound by the terms in that document this rule is referred to as the rule in l estrange v graucob 79 this rule was approved by the high court of australia in toll fgct pty ltd v alphapharm pty ltd 80 but a valid contract may with some exceptions be made orally or even by conduct k typically contracts are oral or written but written contracts have typically been preferred in common law legal systems 81 in 1677 england passed the statute of frauds which influenced similar statute of frauds laws 82 in the united states and other countries such as australia l in general the uniform commercial code as adopted in the united states requires a written contract for tangible product sales in excess of 500 and real estate contracts are required to be written if the contract is not required by law to be written an oral contract is valid and therefore legally binding 84 the united kingdom has since replaced the original statute of frauds but written contracts are still required for various circumstances such as land through the law of property act 1925 an oral contract may also be called a parol contract or a verbal contract with verbal meaning spoken rather than in words an established usage in british english with regards to contracts and agreements 85 and common although somewhat deprecated as loose in american english 86 if a contract is in a written form and somebody signs it then the signer is typically bound by its terms regardless of whether they have actually read it 79 80 provided the document is contractual in nature 87 however affirmative defences such as duress or unconscionability may enable the signer to avoid the obligation further reasonable notice of a contract s terms must be given to the other party prior to their entry into the contract 88 89 an unwritten unspoken contract also known as a contract implied by the acts of the parties which can be either an implied in fact contract or implied in law contract may also be legally binding implied in fact contracts are real contracts under which the parties receive the benefit of the bargain 90 however contracts implied in law are also known as quasi contracts and the remedy is quantum meruit the fair market value of goods or services rendered certainty completeness and intention of parties edit further information contra proferentem good faith law and intention to be legally bound in commercial agreements it is presumed that parties intend to be legally bound unless the parties expressly state the opposite as in a heads of agreement document for example in rose frank co v jr crompton bros ltd an agreement between two business parties was not enforced because an honour clause in the document stated this is not a commercial or legal agreement but is only a statement of the intention of the parties in contrast domestic and social agreements such as those between children and parents are typically unenforceable on the basis of public policy for example in the english case balfour v balfour a husband agreed to give his wife 30 a month while he was away from home but the court refused to enforce the agreement when the husband stopped paying in contrast in merritt v merritt the court enforced an agreement between an estranged couple because the circumstances suggested their agreement was intended to have legal consequences if the terms of a contract are so uncertain or incomplete as to elude any reasonable interpretation the parties cannot have reached an agreement in the eyes of the law 91 an agreement to agree does not constitute a contract and an inability to agree on key issues which may include such things as price or safety may cause the entire contract to fail however a court will attempt to give effect to commercial contracts where possible by construing a reasonable construction of the contract 92 in new south wales even if there is uncertainty or incompleteness in a contract the contract may still be binding on the parties if there is a sufficiently certain and complete clause requiring the parties to undergo arbitration negotiation or mediation 93 courts may also look to external standards which are either mentioned explicitly in the contract 94 or implied by common practice in a certain field 95 in addition the court may also imply a term if price is excluded the court may imply a reasonable price with the exception of land and second hand goods which are unique if there are uncertain or incomplete clauses in the contract and all options in resolving its true meaning have failed it may be possible to sever and void just those affected clauses if the contract includes a severability clause the test of whether a clause is severable is an objective test whether a reasonable person would see the contract standing even without the clauses typically non severable contracts only require the substantial performance of a promise rather than the whole or complete performance of a promise to warrant payment however express clauses may be included in a non severable contract to explicitly require the full performance of an obligation 96 civil and mixed law jurisdictions edit the primary factor distinguishing civil law and mixed law jurisdictions from their common law counterparts is the absence of the requirement of consideration and thus the absence of any legal distinction between contracts by deed and other written contracts contract law in the majority of civil law jurisdictions is part of the broader law of obligations codified in a civl or commercial code clearly outlining the extent to which public policy goals limit freedom to contract and adhering to the general principle that the sole formal requirement for a contract to be formed is the existence of a meeting of the minds between the two parties at the time the contract is purported to have been formed civil law jurisdictions with codified laws of obligations distinguish between nominate and innominate contracts nominate contracts are standardised categories of contracts which are closely regulated in form and substance by law contracts for sale gift lease and insurance are generally regulated as nominate contracts 97 98 99 the obligor and obligee under nominate contracts have rights and obligations specially prescribed by law nominate contracts are usually statutorily required to include certain express terms essentialia and are construed to include terms implied in law unlike civil law jurisdictions with codified laws of obligations jurisdictions following roman dutch law or scandinavian law typically lack specific provisions for nominate contracts as their law of obligations is largely determined by judicial precedent and individual statutes similar to common law jurisdictions nevertheless the principles underlying the formation of contracts in these jurisdictions are closely related to those of other civil law jurisdictions chinese contract law edit there are four distinct systems of contract law presently in force in china three of which are in force in different regions administered by the people s republic of china and one of which is...