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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 |
| 3.7. 'Benefit' or 'detriment' as consideration |
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Read the facts and the question and then choose the best answer. A, a landlord, says to B: "I will take 10% off the rent you pay each month for your shop if you stay open on Sundays." B, a shopkeeper in A's mall replies: "OK, I'll stay open on Sundays if you reduce my monthly rent by 10%." In these circumstances, is B providing sufficient consideration to make A's promise legally enforceable?
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(a) No, because B is only agreeing to stay open on Sundays, which is not the same as giving something to A in exchange for the reduced rent. (b) Yes, because by agreeing to stay open on Sundays, B is giving a benefit to A in exchange for the reduced rent. |
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