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First Principles of Business Law |
| Making a contract |
| 3. The second essential element of formation: Formal execution or exchange of consideration |
| 3.11. A practical benefit as consideration |
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Read the facts and the question and then choose the best answer. A, a landlord, says to B: "You owe me $1,000 in overdue rent and I am suddenly short of cash. I don't want to have to borrow money from the bank to tide me over so if you pay me in full before tomorrow I'll let you off paying rent next month. B, a tenant in A's building replies: "It'll be hard financially, but OK, I'll pay you the $1,000 tomorrow." Is B providing sufficient consideration to make A's promise of a rent-free month legally enforceable?
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(a) Yes, because getting the money immediately gives A the benefit of not having to borrow money. This is sufficient consideration. (b) No, because B already owes the overdue rent to A. Promising to pay what is already due cannot be consideration. |
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