JD Next Practice Exam

Is consideration valid if it involves giving up a right you do not legally possess?

1. Yes, if agreed by both parties

2. No, it cannot create a legally binding contract

3. Yes, if it is in writing

4. No, but only if the promise is verbal

The correct answer is: No, it cannot create a legally binding contract

Consideration is a fundamental element of a contract, typically involving something of value exchanged between parties. For consideration to be valid, it must involve rights or benefits that are legally recognized. When a party proposes to give up a right they do not legally possess, this does not constitute valid consideration because one cannot offer something that they do not legally have the authority or entitlement to relinquish. In this context, engaging in a transaction that hinges on giving up a non-existent right fails to create a legally binding contract. This is because the essence of consideration is grounded in actual value exchanged; if there is no legitimate right to give up, then the promise lacks the necessary substance that consideration demands. Consequently, this leads to a failure in the mutual agreements that underpin contractual obligations. The other options suggest varying conditions under which consideration might be valid; however, none apply because the key tenet lies in the existence of a legal right. A mutual agreement or a written promise does not negate the necessity for legitimate consideration based on actual entitlements. Likewise, whether the promise is verbal or not does not affect the legal standing of the rights involved. Thus, the proposition that consideration may be valid under certain conditions does not hold true in the case of a non-existent right.