Robert owns Seattle Remodel, LLC (SR). SR had a lead on a lake view home that wa

Question

Robert owns Seattle Remodel, LLC (SR). SR had a lead on a lake view home that was undervalued by the owner, Sam. Although SR did not have a listing agreement with Sam, Robert contacted Lake View Properties. SR knew that Lake View was looking for a location for a commercial development. SR contacted Lake View stating only that he had a hot piece of property that just came on the market. Robert said he would reveal the location of the property and the owner's name if Lake View would sign an agreement which would require Lake View to pay a 20% commission to SR if a sale of the property resulted. The contract was signed. Six months later, Lake View bought the property after negotiating the deal without reporting back to Robert. Lake View claims they do not owe a commission to SR because there was insufficient consideration to support the payment of commission so large. Lake View claims that all SR did in the entire transaction was to reveal the location of the property and the owner's name. Is the contract valid? Was there sufficient consideration to make this promise enforceable? Please support your answers with at least one example.

Explanation / Answer

A contract was signed between Lake View Properties, and, Seattle Remodel to pay a 20 percent commission to SR if a sale of the property resulted. If there was no breach of conditions mentioned in the contract, the contract is valid.

Written contracts are legally binding and enforceable. Matters such as payment, timeframe, and, procedures to follow in case of a dispute are set out in the contract.

Consideration is an essential element of a valid contract. The contract is legally enforced when one of the parties gives something, and, gets something in return. It may consist of a promise to perform an act. In case both parties exchange a mutual promise, the consideration is not insufficient.

Courts require sufficient consideration, not adequate consideration. This means the value exchanged in the contract may not be adequate but the courts do not concern themselves with the amount of consideration.

Instances of insufficient consideration

If a person promises to do something they are bound to under a contract, it is not a valid consideration

Stilk v Myrick (1809) 2 Camp 317

Individual under a public duty to perform a task agreeing to perform that task

Collins v Godefroy (1831) 1 B & Ad 950

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.