Consideration is simple, contracts are a two-way street. One side benefits along with the other side. If only one benefits, the contract is unenforceable. There are three rules of consideration: 1) both parties must get something of comparable real value. 2) A promise of value is a contract that counts as consideration. 3) Both parties have agreed on an arrangement and have a deal (Beatty, Samuelson, & Bredeson, 2008) Value means that both parties get something from the other; it can be an act or forbearance.
An act is when something is done that the party was not legally required to do, whereas forbearance is something that the party has a legal right to do and agrees not to. There is not valid consideration in the case of Kim v. Son. Son businesses were corporations that Kim had invested $170,000 in. When these businesses failed, Son felt guilty over Kim’s losses. The two men had been drinking heavily and Son promised with his blood that he would pay back the money. Because this involves corporate transactions, Son is not personally liable for any debt that the businesses occur.
Kim is out the money he invested; now Son can feel guilty because of the investment that Kim lost, but is under no obligation to repay the money. This is a case of one getting the benefit and one losing which is not how consideration is described. Both parties agreed to a promise of paying Kim back on his investment, this is an act that they were not legally required to do. Kim has agreed to not sue Son initially, and looking at the circumstances he has no right to. Investments are risky; a party can make money on their investment just as easily as they can lose it.
And in this particular case, Kim lost his $170,000. The Uniform Commercial Code (UCC), as defined in the Free Financial Dictionary is “a set of statures governing the conduct of business, sales, warranties, negotiable instruments, loans secured by personal property, and other commercial matters, which has been adopted with minor variations by all states except Louisiana”. Common Law, as described in The Free Financial Dictionary is “a law derived from common usage, ancient customs, or the pronouncements and interpretations of courts.
Contrast with code law, or civil law, which relies on statutory enactments for the articulation of rights and responsibilities, and then judicial interpretation of those statures. ” In the case of Kim v. Son, I believe the Uniform Commercial Code was used. Anyone can promise not to sue, but there has to be a reasonable reason to sue in the first place. It is not right for Kim to sue as this was an investment on Kim’s part, something that could have made him money and then again lose it.
Investments are somewhat like gambling in that a person is expecting to gain something, and there is no way that they know how it will turn out. Most investors do some research about the businesses first to see what they can expect. A lesson can be learned from this case. If you invest in a business, there is no sure way to financially better yourself. Writing in blood can be legal but there has to be consideration of which there was none in this case. A corporation may not be sued as if it was a person. Intoxication, although it was apparent in this situation, may not be the best defense.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 17 December 2016
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