Labriola sued the Pollard Group and sought a declaratory judgment annulling the non-compete obligation. A declaratory judgment is used when a dispute has arisen but no damage has yet occurred. Labriola asserted that there was no consideration since it had not benefited from the 2002 non-compete obligation. The trial court disagreed, saying the deal was a valid contract, so Labriola appealed to the Supreme Court. The Supreme Court ruled in favour of Labriola, finding that under the new agreement, Labriola had received nothing more than his continued employment from Pollard Group and therefore had provided nothing in exchange for him. Only the Pollard group benefited. For this reason, the non-compete obligation was found to be unenforceable and Labriola was free to seek work in other printing plants in the Tacoma area. Have you ever agreed to do something for a fee? Have you ever paid to park your car in a parking lot? Have you ever bought something in a store? If you answered yes to any of these questions, then you were party to a contract, a type of agreement that is legally binding and enforceable for the people who enter into it. The consideration must also be negotiated to be valid. It simply means that both parties agree to receive a reward and receive a disadvantage in the contract.
In our example, Mr. Smith received an award: his toilet was repaired. But he also received a disadvantage: he gave up $295. Conversely, Mrs. Jones` reward was $295, and the downside was the performance, Mr. Smith`s toilet to repair. A few months later, Pollard restructured the way commissions were paid to sellers. In the previous contract, sellers had to sell at least $25,000 in print jobs to earn a commission. In the new contract, print vendors were required to sell at least $60,000 in print jobs.
This increase in the sales quota, if not respected, would reduce Labriola`s revenues by 25%. The contract also required sellers to pay all attorneys` fees in the event of legal action regarding the terms of the contract. For this reason, Labriola decided to look for a job elsewhere. During the examination by a higher court, it was agreed that the offer to maintain employment in Labriola only at will in exchange for the signing of a competition agreement restricting competition did not constitute sufficient consideration and that the contract was therefore unenforceable. Labriola won. If Pollard Group had offered Labriola something in exchange for the restrictive covenant, the court might have taken a different view. Let`s look at an actual court case that exemplifies the concept of consideration. In 2004, the Washington State Supreme Court ruled in Labriola v. Pollard Group, Inc.
The Pollard Group was a company that provided printing services in Tacoma. In 1997, the company hired Anthony Labriola as its salesman. His employment contract stipulated that he was a voluntary worker, which meant that he could be dismissed at any time without giving a reason. The consideration can take the form of money, goods, promises, services or something else. It can be something as simple as a promise to do or not to do something. For example, if you enter into a contract with your neighbour in which he agrees not to sue you for the damage you have caused to his property, and in return you agree to pay him an amount of $800, then the amount of $800 is the consideration that your neighbour receives, while his promise not to sue you, is the consideration you receive under the contract. On the other hand, if you tell your neighbour that you will give her the bike if you cannot sell it at your flea market, there is no element of consideration because she has not agreed to pay you anything. Your promise to give him the bike may be an enforceable promise, but it is not a binding contract.
The counterpart is generally not an element of a gift. 4. Reciprocity – The parties had “a meeting of chiefs” regarding the agreement. This means that the parties have understood and agreed on the content and basic terms of the contract. The following cases are equivalent to non-consideration: The existence of consideration distinguishes a contract from a gift. A gift is a voluntary and free transfer of property from one person to another without promising anything of value in return. Failure to keep a promise to make a gift is not enforceable as a breach of contract because there is no consideration for the promise. 3. Acceptance – The offer has been clearly accepted. Acceptance can be expressed by word, deed or execution as required by the contract. In general, acceptance should reflect the terms of the offer. If this is not the case, the acceptance is considered a rejection and a counter-offer.
3. Enforcement may consist of an act other than a promise, omission or the establishment, modification or destruction of a legal relationship. [1] Consider an interesting case involving a counterpart between an employer and an employee in an employment contract. The consideration must also be negotiated, which means that there is an exchange of promises and something of value where both parties receive a reward and receive a disadvantage in the contract. It`s simple! Let`s say John and Jamal are currently negotiating the sale of a bike that was displayed in the garage. John wants to start cycling, so he offers Jamal $50 in exchange for the product. Jamal will hand over the bike to John after receiving the money. So both sides negotiate and get a disadvantage. John`s bank account is reduced by $50.00, but he has received new wheels. Jamal no longer has his bike, but has an extra $50.00. No matter what type of contract you make, you`ll probably hear the term “consideration.” In addition to offer and acceptance, “consideration” is one of the essential elements of a contract.
But what does that really mean? In some jurisdictions, contracts that require such nominal consideration or “peppercorn” will be maintained unless a particular contract is considered unscrupulous. In other jurisdictions, however, the court will reject “considerations” that have not actually been traded. Occasionally, courts in these countries may refer to “reasonable” or “valuable” consideration, but in reality, the court does not consider the adequacy of the consideration, but whether it has been negotiated. The traditional idea that courts will not consider the reasonableness of consideration, an old concept of English common law, is not compatible with the doctrine of advantage and disadvantage (in which courts implicitly analyze whether the parties receive a sufficient advantage), but with the doctrine of deadweight (in which only the subjective intentions of the parties are taken into account). A contract requires six elements to be enforceable: You say that a rose is a rose is a rose. And for the most part, that`s true. But in contract law, a contract is not always a contract. In other words, a contract needs six elements to be considered enforceable.
It must contain: Under contract law, there must be a counterparty and both parties must benefit and disadvantage. In the present case, only Pollard benefited from the new anti-competitive agreement. Labriola agreed to essentially the same terms of the original contract: salary and commission, arbitrary employment, and non-competition. No new obligations have arisen for the employer either. In fact, Pollard added a new clause requiring Labriola to pay all attorneys` fees and costs in the event of a contract dispute. To this end, we focus on the consideration or exchange of negotiated promises between two or more parties. The (second) reformulation of contracts stipulates that the elements of consideration are as follows: if no consideration is included in a contract, the contract becomes invalid and the courts may refuse to enforce the contract. Sometimes a contract cannot be considered, even if, on the surface, it seems that the parties are trading something valuable. But what if a grandmother gives her grandson a ten-dollar bill for his birthday? Does this mean that the grandmother and grandson signed a legally binding contract? The grandmother gave the grandson something valuable, and he accepted it, but there is no contract, because the grandmother did not get anything from the grandson in exchange for her money. This has not been taken into account. The consideration must reflect equal value to both parties; Nominal or symbolic values are generally not considered valid.
For example, most courts would not consider a dollar as sufficient consideration for a brand new Ferrari. Most contracts contain one or two lines indicating that a valid and sufficient consideration forms the basis of the contract. However, the mere mention of something in the contract does not prove the existence of valid consideration. Similarly, consideration does not become invalid if it is not mentioned in the contract. There are two common theories that attempt to explain this consideration. The first is the “advantage-disadvantage theory”, according to which a contract must be either to the advantage of the promisor or to the detriment of the promisor in order to constitute consideration (although the promisor`s disadvantage is the essential and immutable criterion of the existence of consideration and not of whether it can be justified by an advantage for the promisor[4]). The second is “market theory,” in which the parties subjectively view the contract as the product of an exchange or negotiation. Market theory has largely replaced utility and disadvantage theory in modern contract theory, but judges often cite both and can use both models in their decisions.