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Detailing the different types of contract consideration

As contract disputes in Miami arise, it is important that you understand the basics of contract law in order to defend your claims. Many of those that we here at Welbaum Guernsey Hingston Gregory and Black, LLP have worked with in the past do not comprehend the basic element of contract consideration. You definitely should, given that this promise maybe what determines a contract to be enforceable.

In basic terms, consideration is the promised benefit derived by each party to a contractual agreement. An example may be your relationship with a service provider. That provider completes the service, and you pay for it. According to the website MercantileLaws.com, there are three types of consideration:

  •          Present consideration: This describes a benefit that moves simultaneously with the promise. In the aforementioned example, the company you are contracted with provides the service through the month, and you pay at the beginning for those services at the end of the month.
  •          Future consideration: The benefit to both sides is promised at a future date. Going back to the service provider example, a contract involving future consideration would involve the company promising to provide the service next week, and you promising to pay for it at that time.
  •          Past consideration: A compensatory agreement was made after the benefit was offered. Again, referencing the previous example, in this case you agree to pay the company for services already provided.

Sometimes a court may invalidate a contract based on past consideration because the benefit was never bargained for. Other examples where consideration may be lacking is where one party is legally obligated to perform, a promise is illusory (something you cannot actually do), or the promise amounts to a gift.

More information of the fundamentals of contract law can be discovered by continuing to explore our site. 

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