http://smallbusiness.findlaw.com
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| Friday, Aug. 29, 2008 |
Like all contracts, construction contracts require "consideration" in order to be enforceable. Consideration can consist of money, as well as agreeing to do something that you don't have to do.
Example: I agree to pay you $2,300 to paint my house. My agreement to pay you $2,300 is the "consideration" (what I give up to get what you promised) that makes this contract enforceable.
A promise that is made without the expectation of anything in return is known as a gratuitous promise. Such a promise is not generally enforceable because there is no consideration.
Example: I promise to seal your driveway the next time I seal mine; you don't agree to do anything for me in return. My promise to seal your driveway is unenforceable because you haven't provided me any consideration.
In the construction context, consideration may be an issue when a prime contractor is forced by a supplier to pay more than the existing contract amount with the supplier for a given item.
Example: A general contractor agreed to buy a trash disposal system from a subcontractor. Relying on the subcontractor's bid, the general contractor was awarded the contract. After the award, the subcontractor demanded a higher price, which the general contractor agreed to pay. The court found that the agreement to pay the higher amount was unenforceable because there was no consideration.