Question 1

A contract is an agreement that identifies and governs the parties’ rights and duties concerned in a contract. Usually, a contract does not follow a specific structure; however, it includes terms and conditions implied or expressed that form the agreement’s foundation. The terms outline contract warranties and conditions (Harder, 2018). Five essential elements make a contract legally binding and enforceable, and one of them is a consideration.  In the contract, consideration is an essential element of a contract that illustrates something that has economically worthy in the eyes of the law that is bargained for and received by the promisor from the promisee in exchange for a certain action or nonaction (Giancaspro, 2020). It takes a form of a paramount expenditure of effort or money.   This exempts the promises of betting, gaming, and love and affection, among others.

Consideration is essential as it differentiates gifts and contracts. The contract involves two parties, and the gift is one of the sided promises not supported by consideration (Harder, 2018). Usually, the law does not impose a gift unless it is made by the actions. The foundation of the contract is the exchange of promises.  The parties concerned in the contract should be both promisee and promiser, and they should suffer detriment and receive a benefit. The detriment and the benefits are what are considered as a consideration in a contract.

A consideration in the contract is characterized by the three elements: a promise to do something, not do something, and a promise to pay money (Rakoff, 2016). One example of a contract is an employment contract. The workers are given a contract with written terms and conditions, including duties and responsibilities that the staff is liable for. They promise to perform the duties and responsibilities, and the employers in exchange promise to pay.

One example of a case in which consideration exists is when a man who is dying asks that his wife be given a house if she remains unmarried, pays the nominal rent, and ensures that the house is in good condition. In this case, there is a consideration, before the wife is given the house, there are some factors that need to be considered. For example, the wife must remain unmarried. This one of the terms and conditions of the contract. In case the wife remarries, she will not be given the house.

The second example of the contract’s consideration is a situation where a brother-in-law told a wife to the brother to leave her home and go and live with him in exchange for giving her a nice place to stay. She did that. However, the brother in law later chased her. In this case, there was no consideration. This is because gift promises are not enforced, and also there was no bargain: a condition needed for the performance of the gift-promise was not involved. Therefore, moving from her place to stay with a brother in law is not considered a consideration.

Question 2

Agency relationship illustrates the fiduciary association in which one person (Principal) permits an agent to act on his/her behalf. The principal could be the owner of an enterprise while the agent could be the employer (Muscat, 2016). For the relationship between principal and agent to be efficient, there are rules and regulation which govern them. Honesty is a crucial element in the relationship between the two individuals. This means that the agent needs to inform the principal of what’s going on, and therefore, they do not receive secrets profits or bribes. Therefore, expenses occurred when having a third party as the sub-agent, the agents are liable.

For the case given, Peter is the principal, and Tom is the estate agent, while Mary and Allan are the clients. For the case, I agree that Tom could be entitled to the commission when Peter contracted with another buyer Alan at a lower price and better price. The estate agent is supposed to inform the client about the action he/she is taking. This is because the agent needs to show loyalty to the principal. Also, honesty is paramount in the relationship between the principal and the estate agent. Tom, the estate agent, had introduced Malaysia Mary to Peter, and they agreed to sell the property to her at HK$10 million.

However, Tom flew to Malayisa to negotiate with Mary, and finally, the property was sold to another buyer Alan at a lower price HK$9million. This means that the property was sold at a lower price than the expected one. Tom, the estate agent, did not inform Peter about selling the property at a lower price to Alan. Therefore, he is accountable for the lower commission. The agent is entitled to the expenses, liabilities, and losses incurred when conducting the principal’s business. As a result, Tom is entitled to the commission for selling property at a lower price. Also, one of the rights of the estate agent is to follow instructions. In the case, Tom introduced Mary to Peter, and they decided to sell the property to him. Changing the mind was not the following instruction, and therefore, selling the property to Allan subjected Tom to be responsible for the lower prices.

Also, when Peter contracted business at a high price, Tom is entitled to the commission. Usually, most of the estate agents are paid on the commissions. Thus, if they sell the property at a high price, their commission is usually high. During the start of their jobs, estate agents sign a contract with the principal, which illustrates their terms and payment (Bal, 2017). Also, the estate agents have rights to commission (Devonshire, 2019). When the estate agent brings about a purchase of the product, they are entitled to a certain percentage of the transaction. Therefore, if he/ she sells at a higher price, he is entitled to a certain commission. As a result, Tom is entitled to a certain percentage when Peter contracts a business at a high price with Allan.







Bal, M. (2017). Securing property rights in India through distributed ledger technology. New Delhi: Observer Research Foundation.

Devonshire, P. (2019). Forfeiture of payment to a delinquent agent. Northern Ireland Legal Quarterly70(2), 263-280.

Giancaspro, M. (2020). Testing the boundaries of the consideration doctrine: Can you contract to buy and sell a ghost?. Alternative Law Journal45(2), 107-113.

Harder, S. (2018). One-sided contract modifications and the requirement of consideration. Lloyd’s Maritime and Commercial Law Quarterly2019(1), 138-161.

Muscat, K. (2016). The institute of civil brokerage under Maltese law with particular reference to estate agents’ rights and obligations (Master’s thesis, University of Malta).

Rakoff, T. D. (2016). The Five Justices of Contract Law. Wis. L. Rev., 733.

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