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

 

 

 

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?

 

(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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