Exception to the Rule No Consideration No Contract

In contract law, the general rule is that an agreement is not binding unless there is mutual consideration between the parties involved. This means that both parties must give something of value in exchange for the other`s promise. However, there are exceptions to this rule, and one such exception is known as “Exception to the Rule – No Consideration, No Contract.”

The exception to the rule of consideration applies when there is a promise made without any exchange of value between the parties. This promise may be enforceable as a binding contract even if no consideration was exchanged. This can occur in certain situations, such as when a promise is made out of a sense of moral obligation or when there is a pre-existing legal duty.

One example of the exception to the rule of consideration is the case of Carlill v. Carbolic Smoke Ball Company. In this case, the company offered a reward to anyone who contracted influenza after using their smoke ball product according to the instructions. One customer, Mrs. Carlill, contracted influenza after using the smoke ball and claimed the reward. The company argued that there was no consideration for the promise of the reward because the customer had already purchased the smoke ball. However, the court held that the promise of the reward was a binding contract because it was made to the public at large and could be accepted by anyone who met the requirements.

Another example of the exception to the rule of consideration is the case of Stilk v. Myrick. In this case, two sailors were hired to work on a ship for a set wage. During the voyage, two other sailors deserted the ship, leaving the remaining crew to take on their duties without any additional compensation. The remaining crew members sued for additional pay, but the court held that they were not entitled to it because they had a pre-existing legal duty to perform those duties in the absence of other crew members.

Exceptions to the rule of consideration can also occur in situations where there is a moral obligation to fulfill a promise. For example, if a person promises to pay for a medical treatment for a friend`s child out of a sense of duty or moral obligation, there may not be any exchange of value, but the promise may be enforceable as a binding contract.

Overall, the exception to the rule of consideration can be a useful tool in certain situations where a promise is made without an exchange of value. However, it is important to note that these exceptions are not applicable in all situations, and each case must be evaluated on a case-by-case basis. As a professional, it is important to not only understand the exceptions to the rule of consideration but also be able to explain them in a clear and concise manner to readers.