In the 16th century there was no law of contract and in late middle ages the tort of owing a debt and failing to repay existed. Law used to focus on the wrongful act of falling to pay money owed on debt. The agreements which included exchange of goods and services were not enforceable. As the trade and business expanded people started to manipulate the "word of mouth" which created disputes between the parties. Later the merchants did not trust each other. For this reason law began to enforce all kinds of commercial bargains where there was valuable consideration. Then it has been developed case by case basis to the kind of contract law. During the first half of the 17th century the term 'contract ' began to be used informally in its modern sense of agreement. Contract law focused on the consumer protection, prevention of frauds and sale of goods act.
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Law is a set of rules that control the politics, economics and society. It is the mediator in relationship between people. The two basic source of law are common law (decisions made by judges in courts) and statute law (decisions made by parliament).
In every contract something is exchanged like making the payment and taking the ownership. The exchange of value is known as consideration. The definition of consideration is " a valuable consideration may consists either in some right, interest ,profit or benefit accruing one party, or some forbearance, detriment , loss or responsibility given, suffered or undertaken by the other " given by Lush J. ( currie v misa (1875 ),( balfour v balfour (1919).
All agreements are not contracts but all contracts are agreements. Contract law deals with enforceable promises between parties involving present or future but not past (Anderson v Glass (1868). Contract is the agreement between two or more parties. Contracts may be expressed or implied .In common law jurisdiction the three main elements of a valid contract are agreement (offer & acceptance), consideration and intention to create legal relationship. The other elements of contract are capacity , legal object and genuine consent There is no need of consideration if a contract is made by deed. It is easy to imagine a picture where an intention to trade dishonestly leads to a contract dispute. So English law looks for objective test of agreement, attempts to look at the conduct and communication between the parties involved.
Contracts are made by every individuals for different purposes in our routine life like buying a book , leasing an apartment and buying a meal all the three involve in agreement between two parties where we assume that one party pays something in terms of value ( money or monetary benefits ) and the other renders the product or service. It is quiet confusing that some agreements are denoted as binding contracts while some are not , some people are eligible to enter into the contracts but others are not, why there is a need of valuable consideration to be a valid contract. If there is agreement, intention and consideration are present then the agreement is binding whether or not the parties have understood the contents of the agreement (l' Estrange v Graucob ltd (1934). If the valid contract is breached the innocent party may have remedy in contract law either suing for damages or specific performance. A contract can be dissolved when the parties agree to end it, by happening of an unknown event, conditional subsequent, completing the work.
DIFFERENCE BETWEEN CONTRACT AND GIFT
In a contract there is some exchange of considerable value like A sells a motor cycle to B for $ 6000 and the parties exchange the motor bike from A to B and $ 6000 from B to A. where as in a gift there is no consideration hence it is said to be gratuitous promises like donations and gifts there is something donated or gifted but nothing is expected other then thanks or best wishes.
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Contract plays a vital role in the modern days. It helps out to claim damages for non performance, defective performance and late performance but sometimes the court orders the default party not to breach the contract. Contracts solve the disputes arising between merchants and business people. Merchants and the consumers should be active at time of agreement as once the agreement is made it has to be performed as agreed unless and until there is a genuine reason. Contract law helps to bring the defaulting party to court. It helps every individual in their routine life in some way or the other. Contract law is ancient and was found by common law. Contracts were mostly used for creating market economy and business proceedings. The contract law is essential for bankers by which they can lend the loan taking a surety of the third party. In the olden days it was used for land related matters as there was no currency to exchange they were using barter system but land was termed as wealth. So contracts helped them to deal with the land settlements. By this we are clear that contract law was not a western idea.
THE ORIGIN OF DOCTRINE OF CONSIDERATION
The origin of consideration is related to the history of breached promises in the second half of 16th century. In 1809 common law proved that a promise made by a party to perform an act which is already legally bound to perform is not good consideration. The rules have changed from time to time. According to professor 'simpson ' consideration developed with the law uses of land ,must surely have a strong claim upon the attention of anyone who sets out to investigate the history of the contractual doctrine. The principle being that the presence or absence of consideration determines the nature of the grant.
SIR FREDERICK POLLACK ON CONSIDERATION
Frederick Pollock (1845 -1937) was educated at Eton and Cambridge. He was judge of the admiralty court of the Cinque Ports. Some of the books written by him are the principles of Contract (1876) and the Law of Torts (1887). Pollock was editor (1885-1919) of the Law Quarterly review a major British legal periodical and editor in chief (1895-1935) of the Law Reports. Frederick defined consideration as "An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable." Frederick's definition was approved by lord Dunedin in Dunlop v Selfridge LTD.
THE IDEA OF THE CONTRACT LAW AS BARGAIN
Consideration is used to bargain the price to proceed further to form a contract which is binding. The parties decide the value of exchange and acts to be performed. Contract law is termed as the sign and symbol of bargain. Contract law as bargain is to be said as before the promisee's act can be regarded as consideration, it must be established that the act is given at the request of the promisor and in reliance upon the promisor's promise: Australian Woollen Mills Pty Ltd v The Commonwealth (1954) ; Australian Woollen Mills Pty Ltd v The Commonwealth (1955) ; Carlill v Carbolic Smoke Ball Co (1893).
CONSIDERATION IN COMMON LAW
Common law countries follow the rules of contract. Consideration is the essential part of contract in common law and if there is no consideration the contract is not binding (not enforceable by court). India follows the common law derived from the British legal system. The Supreme Court is superior and then comes the high court. The Supreme Court is the court of appeal and has extensive appellate jurisdiction. There are no federal courts in India. Common law system is also followed by United States, Pakistan, Australia, New Zealand, South Africa, and Hong Kong.
CIVIL CODE COUNTRIES
Civil law was developed by Roman law and it is code based. The civil law is much older; it is more influential than common law. Most of the Europe, central and south America, parts of Asia and Africa follows the civil law.
CONVERGENCE OF CONTRACT LAW
Convergence of law in the European Union should take place at this argumentative level. Convergence of contract law should not be found in uniform rules, principles or outcomes, but in identifying common sets of arguments to be weighed in different ways in various national jurisdictions. Converging tendencies are divided into three levels rules, fundamental rights and common results. It is important to see how fundamental rights in national law or as laid down in the European Convention on Human Rights may, or may not, contribute to convergence of national contract law. In theory, European harmonization through directives is the most vigorous method of convergence of contract law in the European. But reality is different because of considerable differences in the way these directives are implemented in the various European jurisdictions. It aims to highlight the internal and external perspective on English, French and German law of contractual mistakes. The three systems are converging and diverging.
FUTURE OF CONSIDERATION
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Consideration is one of the essential elements of contract in common law. It is the value to be exchanged as agreed at the time of agreement and the contact wouldn't be valid unless and until there is sufficient consideration. It should be on the basis of present and future but not past. So the contract is future based and it applies in future.
Contract law has helped to improve the business and trade by merchants. If the contract law wouldn't be implied there would be many practical difficulties to understand the concept for trade. No one would trust any one of the parties. International trade has been easy due to contract law; parties have remedies for the nonoccurrence of the event. Contracts are helpful to deal in partnership firms. It also helps out in some cases where the work has to be stopped in between of the completion and the payment solution like quasi contract. I think contract has a future because to run the business smoothly we need a contract by which we can solve the disputes of consumers, suppliers, and manufacturers.