Contract Validity Memorandum
MEMORANDUM
TO: Dr. Doe
FROM: Francis Stein, President Giant Drug Company
DATE: 10th September 2013
RE: Consultation regarding contract Validity
FACTS
1. On May 1, Doe signed and sent Stein the following letter: I will accept a position as vice-president in charge of research for a period of four years at a salary of $500,000 per year.
2. On May 3, Stein received Doe’s letter and called Doe and stated: “Your salary request is too high. Will you reduce it to $300,000?
3. On May 3, in the phone conversation, Doe replied: “Your response is insulting! I am far too good a scientist to work for so little! That’s as low as I can go.”
4. On May 3, Stein immediately sent the following letter to Doe: I resent your statement. I am no longer interested in hiring you.
5. Stein then sent a properly addressed, stamped express mail letter to Doe stating: “Accept …show more content…
And as business people know, a bargain involves more than an offer and an acceptance. It also involves a mutual exchange of value.” Consideration offers a sure legal test for binding commercial relationships. Without consideration, a contract is simply a gratuitous promise that is not enforceable. There must be sufficient consideration, which is anything of value in the eyes of the law. However, consideration does not have to be adequate, meaning that it does not need to have the same value as the consideration given in exchange. The court will not assess the adequacy of the consideration unless there are special circumstances such as suspicions of fraud or undue influence. However, a person who requests goods or services from another is obligated by an implied promise to pay a reasonable price for the goods or services. Rather than seeking damages for breach of contract, the supplier of the goods or services would seek payment under the principle of quantum meruit (reasonable payment for services
TO: Dr. Doe
FROM: Francis Stein, President Giant Drug Company
DATE: 10th September 2013
RE: Consultation regarding contract Validity
FACTS
1. On May 1, Doe signed and sent Stein the following letter: I will accept a position as vice-president in charge of research for a period of four years at a salary of $500,000 per year.
2. On May 3, Stein received Doe’s letter and called Doe and stated: “Your salary request is too high. Will you reduce it to $300,000?
3. On May 3, in the phone conversation, Doe replied: “Your response is insulting! I am far too good a scientist to work for so little! That’s as low as I can go.”
4. On May 3, Stein immediately sent the following letter to Doe: I resent your statement. I am no longer interested in hiring you.
5. Stein then sent a properly addressed, stamped express mail letter to Doe stating: “Accept …show more content…
And as business people know, a bargain involves more than an offer and an acceptance. It also involves a mutual exchange of value.” Consideration offers a sure legal test for binding commercial relationships. Without consideration, a contract is simply a gratuitous promise that is not enforceable. There must be sufficient consideration, which is anything of value in the eyes of the law. However, consideration does not have to be adequate, meaning that it does not need to have the same value as the consideration given in exchange. The court will not assess the adequacy of the consideration unless there are special circumstances such as suspicions of fraud or undue influence. However, a person who requests goods or services from another is obligated by an implied promise to pay a reasonable price for the goods or services. Rather than seeking damages for breach of contract, the supplier of the goods or services would seek payment under the principle of quantum meruit (reasonable payment for services