Business Finance

Throughout this module you learned the basics of contract formation.  An additional requirement of contract formation is consideration. The  courts separate legally binding obligations from mere agreements by  checking for consideration. Under basic principles of contract law,  consideration is the answer to the question, “Why are you entering this  contract?” or “What are you receiving for being a party to this  contract?”

Consideration, quite simply, is the benefit that each party gets or  expects to get from the contractual deal. For example, you paid your  college tuition money for an education. You benefit by receiving the  educational services of the college, and the college benefits by  receiving your tuition money.

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For this written assignment, you will further explore the topic of  consideration and whether it is present in the following scenarios. Read  the facts of the scenario and answer the following questions:

  1. Is there proper consideration? (Further research on consideration is recommended)
  2. Why or why not is there valid consideration?

Your answer to each scenario should be a paragraph in length and must  include the source of your information in a properly formatted APA  citation.

Scenario 1:

Tasha rents an apartment in an undesirable part of town. While  others, such as her Aunt Rita, find it unsuitable, Tasha seems fine with  her living situation. She never experiences any problems with the  neighbors, and the rent is cheap. One day during a phone call, Aunt Rita  tells her that she wants to gift her $10,000 for anything of her  choosing. Tasha figures that this is her aunt’s backhanded way of  getting her to move, so she decides to search for a home. Upon finding a  home, Tasha calls her Aunt Rita and asks for the money. Rita changes  her mind and tells Tasha that she no longer wants to give her the money.  Angrily, Tasha hangs up the phone and heads to the courthouse to sue  her aunt for the $10,000. Is there consideration?

Scenario 2:

Officer Friendly notices a poster announcing that a reward is being  offered for the capture of a nefarious criminal, Fred Doesnogood. During  his evening patrol, Officer Friendly apprehends and arrests Doesnogood.  After he completes his shift he decides to call the number to get the  reward seeing as he is the one who captured him. Will he be able to get  the reward? Is there consideration?

Scenario 3:
Ezra loves watching home improvement shows, but is not that handy when  it comes to doing the actual improvements at his house. During one of  his favorite shows, an ad appears for a local painting company that is  running a fantastic deal. He calls the number and arranges for Izzy to  paint his house on Friday. Izzy shows up on Friday and they agree upon a  price of $700.00 for the exterior of the house to be painted. Izzy  completes the job to the satisfaction of Ezra, but he does not seem to  want to pay. Is there consideration?

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