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Validity of a Contract

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Consideration is one of the essential elements for the formation of a contract. It may consist of a promise to perform a desired act or a promise to refrain from doing an act that one is legally entitled to do. Consideration must have a value that can be objectively determined. A promise, for example, to make a gift or a promise of love or affection is not enforceable because of the subjective nature of the promise.
The Issue:
Whether the agreement was legally binding upon Dream Design or whether it failed for want of consideration.
The Law: The law states that if the promise fulfils an existing contractual duty to the promisor, he does not provide consideration to by the promisor’s promise.
According to Atlas Express Ltd v Kafco (Importers and Distributors)[1989] 3 W.L.R 389 - Carrier A agreed to carry K’s certain goods at a certain rate, which was calculated by A on the basis that x cartons of K’s goods could be carried per load. Finding that the calculation was wrong and knowing that K’s survival in the business depended on the goods reaching an important customer, Woolworth Plc, A told K that A would not carry K’s goods to W unless K paid twice rate. K was unable to find an alternative carrier within time and promised to pay the new rate. But later K refused to pay the difference money. A’s action to recover that sum failed because K had agreed to pay under compulsion and under protest. The court held that it is a case of undue influence.
In the case of Parma Steel v Dream Design; on 22nd October 2009, Parma Steel entered into a written contract to provide Dream Design with fabricated steel for the first part of the foundation, at a cost of $156 per ton of “Hard Grade” and $165 per ton for “Grade 60,000.” In this case Parma Steel could not say that making the deliveries was the consideration as they were already bound to make the deliveries under the…...

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