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Contract law – Consideration must be sufficient but not adequate
Sufficient consideration is required, but not adequate.
Many of us will have heard the term peppercorn rent. English law does not need adequate consideration. Contracts do not require the economic value of consideration to match the value of what the other party promises to perform or produce in exchange. A landlord can rent a flat to a renter in exchange for a peppercorn. Consider this peppercorn if it is what the landlord requested in exchange for the flat. In other words, if the landlord asked for a peppercorn in exchange for the flat, the consideration will suffice.
Key term: adequate
Consideration does not have to be adequate. This indicates that consideration does not need to reflect the monetary value of the exchanged goods or services.
Key term: sufficient
Consideration is sufficient if it is what the promisor requested in exchange for their pledge. Put your knowledge to the test and attempt.
Celine sells her diamond ring to a pawnbroker for £15. Celine later requests that the pawnbroker return the diamond ring. Celine explains that because the ring is worth more than £15, the pawnbroker's payment does not count and hence the arrangement is not legally binding. Celine’s contract with the pawnbroker may not be legally binding due to a lack of regard, thus can she force them to return the ring? The answer is "no." English contract law does not need adequate analysis. English law focuses on whether the consideration is sufficient. In general, if the promisee receives what they requested or agreed to, it is considered sufficient to make the promise binding.
Sufficient consideration is required, but not adequate.
Many of us will have heard the term peppercorn rent. English law does not need adequate consideration. Contracts do not require the economic value of consideration to match the value of what the other party promises to perform or produce in exchange. A landlord can rent a flat to a renter in exchange for a peppercorn. Consider this peppercorn if it is what the landlord requested in exchange for the flat. In other words, if the landlord asked for a peppercorn in exchange for the flat, the consideration will suffice.
Key term: adequate
Consideration does not have to be adequate. This indicates that consideration does not need to reflect the monetary value of the exchanged goods or services.
Key term: sufficient
Consideration is sufficient if it is what the promisor requested in exchange for their pledge. Put your knowledge to the test and attempt.
Celine sells her diamond ring to a pawnbroker for £15. Celine later requests that the pawnbroker return the diamond ring. Celine explains that because the ring is worth more than £15, the pawnbroker's payment does not count and hence the arrangement is not legally binding. Celine’s contract with the pawnbroker may not be legally binding due to a lack of regard, thus can she force them to return the ring? The answer is "no." English contract law does not need adequate analysis. English law focuses on whether the consideration is sufficient. In general, if the promisee receives what they requested or agreed to, it is considered sufficient to make the promise binding.
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