Legal Perspectives

Consideration

What makes it Good and Valuable?

By Gail S. Kelley, P.E., Esq.

From time to time, an A/E may be presented with a contract that starts off with the phrase “For good and valuable consideration, the parties do hereby covenant...” Alternatively, the consideration may be described as “mutually-agreed upon.” This begs the question – what is consideration? And what makes it good and valuable?

Legal Meaning

The confusion is partly due to the fact that the legal meaning of the word consideration (its meaning when used in legal documents such as contracts) has nothing to do with its ordinary meaning. When used in a legal document, “consideration” means something of legal value. Consideration can be money or goods (either tangible or intangible), but it can also be a promise to do something or refrain from doing something.

Required for Both Parties

A contract is not enforceable in court unless both parties provide consideration. In a typical business contract, both parties provide consideration in the form of a promise. One party promises to either supply goods or perform a service; the other party promises to pay for the goods or service. The requirement for consideration is an attempt to ensure that the contract is a legitimate bargained-for agreement. Often a promise will indicate what someone will try to do, or would like to do, but there is no guarantee they will be able to carry out their promise. A court will not penalize someone for failing to keep a promise if the other party did not provide anything of value in exchange. This means courts will not enforce a promise of a gift or a promise to provide a free service. Even if the other party does not receive the gift or service, its position is no worse than it was before the promise was made.

A Promise not to Do Something

Although consideration is typically a promise to do something, it can also be a promise not to do something. This is referred to as forbearance and is the basis for settlement of a claim. If a party believes, in good faith, that it has a claim against another party, whether for breach of contract or some type of injury, their promise NOT to sue is their consideration for the settlement. The other party’s consideration is the amount it pays for the settlement. It is not valid consideration unless the party is giving up something it is legally entitled to do, however. As an example, a neighboring business might be parking its trucks in such a way that it is difficult to access a project site. The project owner could promise to pay the drivers a certain sum when the project is complete if they promise to park their trucks somewhere else. If it turns out that it is not legal to park in front of the job site anyway, the contract is not enforceable. Nevertheless, the owner might want to ensure access to the site. The parties could make the agreement, and if both sides carried out their side of the bargain as agreed, there would be no problem. However, if the owner subsequently refused to pay, the drivers could not get a court to enforce the contract.

Action versus Promise

As noted above, the typical business contract consists of reciprocal promises; this is referred to as a bilateral contract. It is also possible to have a unilateral contract, where one party’s consideration is a promise and the other party’s consideration is an action. In unilateral contracts or agreements, the promise will typically be conditional. For example, the client may agree to pay the A/E an additional fee if the drawings are finished by a certain date. The A/E might not think this can be done, so is not willing to agree to the specified date, but decides to try and ultimately succeeds. The client’s consideration is the (conditional) promise to pay an additional fee. The A/E’s consideration is the action of getting the drawings done by the specified date. The party must not be under a pre-existing duty to perform the requested action. If the A/E’s contract required the drawings to be done by the specified date, it would not be supplying any consideration. If the owner refused to pay the additional fee, the A/E would have no basis for a claim. There is nothing to prevent the owner from paying the agreed upon fee, but the payment would be a gift, rather than fulfillment of the agreement.

View of the Court

Although a contract is not enforceable unless both parties provide valid consideration, the parties’ right to contract under their own terms is a cornerstone of contract law in this country. Thus, courts will not examine whether the consideration provided by each side is equivalent, or even appropriate. The only exception is if there are allegations of fraud or duress, i.e. if one of the parties misrepresented the value of the goods or services it provided, or one of the parties was forced to sign the contract by threats of physical violence. Sometimes contracts, particularly contracts for real estate, use the phrase “For good and valuable consideration and ten (10) dollars.” It does not matter whether the money referred to is ever exchanged. When both parties have signed a contract agreeing that the money was exchanged, neither party can subsequently claim that the exchange never took place.

Good and Valuable Consideration

Finally, to answer the original question, good consideration is defined as consideration founded on natural affection, generosity, love or moral duty. By itself, good consideration is not enough to make a contract enforceable; the consideration must also have legal value. Valuable consideration must involve doing something one does not already have a legal obligation to do, or refraining from doing something one has the legal right to do. The phrase “good and valuable consideration” was once common in contracts; the intent was to emphasize that the parties were exchanging valid consideration and thus the contract was enforceable. Although the phrase is not used in any of the current industry standard form contracts (AIA, EJCDC, ConsensusDOCS), it is sometimes used in custom contracts. There is no harm in including the phrase in a contract, but it really has no meaning; it is generally clear enough from the contract language whether the consideration is valid. And if the consideration is not valid, describing it as good and valuable will not make the contract enforceable.▪

Gail S. Kelley, P.E., Esq., is a LEED Accredited Professional as well as a licensed attorney in Maryland and the District of Columbia. Ms. Kelley can be reached at Gail.Kelley.Esq@gmail.com.

SeiSmic/wind Guide

Materials

American Wood Council

Phone: 202-463-2766 Email: lmerriman@awc.org Web: www.awc.org Product: (SDPWS) Standard with Commentary Description: The AWC Special Design Provisions for Wind and Seismic (SDPWS-08) covers materials, design and construction of wood members, fasteners, and assemblies to resist wind and seismic forces.

Engineered Products

Cast Connex Corporation

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Gripple Inc.

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Hardy Frames

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All Resource Guides and Updates for the 2014 Editorial Calendar are now available on the website, www.STRUCTUREmag.org. Listings are provided as a courtesy. STRUCTURE® magazine is not responsible for errors. See more companies in the 2013 Annual Trade Show issue! Hayward Baker Inc.

Phone: 800-456-6548 Email: info@HaywardBaker.com Web: www.HaywardBaker.com Product: Ground Improvement Description: Hayward Baker Inc., annually ranked #1 Excavation/Foundation Contractor by Engineering News-Record, provides Design-Build ground improvement solutions for support existing or planned structures that require support for wind or seismic loads.

Premier SIPS

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Simpson Strong-Tie

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The Steel Network, Inc.

Phone: 919-845-1025 Email: tdigirolamo@steelnetwork.com Web: www.steelnetwork.com

Product: VertiClip SLB-HD and StiffClip LB-HD Description: New enhanced seismic curtain wall connections for seismic design categories D, E & F. The new connectors allow installers to connect curtain wall studs to the structure without welding time/cost, while addressing seismic requirements in ASCE 7-10 and California Building Code. Both restrict use of PAF’s to attach curtain wall.

Williams Form Engineering Corp.

Phone: 616-866-0815 Email: williams@williamsform.com Web: www.williamsform.com Product: Anchor Systems Description: Williams Form Engineering Corporation has been providing threaded steel bars and accessories for rock anchors, soil anchors, high capacity concrete anchors, micro piles, tie rods, tie backs, strand anchors, hollow bar anchors, post tensioning systems, and concrete forming hardware systems in the construction industry for over 90 years. Software

Applied Science International, LLC

Phone: 919-645-4090 Email: sscoba@appliedscienceint.com Web: www.appliedscienceint.com Product: Extreme Loading® for Structures – Seismic Analysis Description: Used to design new or analyze existing structures against the effects of seismic events. ELS provides engineers with quick and efficient method of evaluating an entire structures as-built conditions against seismic events.

Devco Software, Inc.

Phone: 541-426-5713 Email: rob@devcosoftware.com Web: www.devcosoftware.com Product: LGBEAMER v8 Description: Analyze and design cold-formed cee, channel and zee sections. Uniform, concentrated, partial span and axial loads. Single and multimember designs. 2007 NASPEC (2009 IBC) compliant. Pro-Tools include shearwalls, framed openings, X-braces, joists and rafters.

Digital Canal Corporation

Phone: 800-449-5033 Email: glageju@digitalcanal.com Web: www.digitalcanalstructural.com Product: Wind Analysis Description: Wind Analysis is structural engineering software that completely automates ASCE’s “Minimum Design Loads for Buildings and Other Structures” (7-10 in version 9 and 7-05 in version 8). It calculates and analyzes wind forces on ASCE determined structures and provides detail report.

Enercalc, Inc.

ENERCAL C

Phone: 800-424-2252 Email: info@enercalc.com Web: www.enercalc.com Product: Structural Engineering Library 6 Description: The nations most used software system for structural design of building components. The SEL has powerful modules for wind & seismic loadings on structures following major code requirements. All of the component design modules also allow wind & seismic loadings and extensive load combinations.

Georgia Tech – CASE Center

Phone: 404-894-2260 Email: joan.incrocci@ce.gatech.edu Web: www.gtstrudl.gatech.edu Product: GT STRUDL Description: Includes seismic design and analysis capabilities, with comprehensive Linear/Nonlinear, Static/ Dynamic analysis features for Frame and Finite element structures. Includes moving load generation, response spectrum, transient, and pushover analyses. Models plastic hinges, discrete dampers, tension/compression only members and nonlinear connections. Optional modules for Base Plate Analysis and Multi-Processor Solvers. continued on next page

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LARSA, Inc.

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POSTEN Engineering Systems

Phone: 510-275-4750 Email: sales@postensoft.com Web: www.postensoft.com Product: POSTEN Multistory Description: Th e most effi cient & comprehensive post-tensioned concrete software in the world that not only automatically designs the Tendons, Drapes, as well as Columns for you, but also is the only software built to design multistory post-tensioned structures for wind and seismic forces.

Powers Fasteners

Phone: 985-807-6666 Email: jack.zenor@sbdinc.com Web: www.powers.com Product: PDA Anchor Design Software Description: A real-time anchor design software program which includes options for seismic analysis. By utilizing this free software package, engineers can design using any Powers Fasteners mechanical and adhesive anchors qualifi ed for use with ACI318 Appendix D. Includes normal weight, lightweight concrete, and concrete-fi lled metal deck.

RetainPro Software

Phone: 949-721-4098 Email: info@retainpro.com Web: www.retainpro.com Product: RetainPro 10 Description: Th e latest release of this long standing excellent earth retention structure design software. RetainPro 10 fully supports Seismic loading on retaining walls using either user entered values or internally calculated Mononobe-Okabe equations. Wind loads on projecting stems are also allowed.

RISA Technologies

Phone: 949-951-5815 Email: info@risatech.com Web: www.risa.com Product: RISA-3D Description: Feeling overwhelmed with the latest seismic design procedures? RISA-3D has you covered with seismic detailing features including full AISC 341/358 code checks. Whether you’re using RISA3D’s automated seismic load generator, or using the built-in dynamic response spectra analysis/design capabilities, you’ll get designs and reports that will meet all your needs. S-FRAME Software

Phone: 203-421-4800 Email: info@s-frame.com Web: www.s-frame.com Product: Structural Offi ce R11 Description: A complete structural analysis, design and detailing management system, featuring powerful FEM and FEA solutions, steel and concrete design tools, powerful BIM and Cad links, and the ability to support any material type, S-FRAME is widely adopted in a variety of industries, both commercial and industrial. Product: S-FRAME Analysis Description: A structural modeling and analysis program, features advanced methods for seismic and wind load analysis including pushover, nonlinear quasistatic, base motion time history analysis and hysteresis material models. S-FRAME includes powerful BIM and CAD links and a model validation tool for viewing or animating analysis results including time-history.

strand7 Pty Ltd

Phone: 252-504-2282 Email: anne@beaufort-analysis.com Web: www.strand7.com Product: Strand7 Description: An advanced, general purpose, FEA system used worldwide by engineers, designers, and analysts for a wide range of structural analysis applications. It comprises preprocessing, solvers (linear and nonlinear static and dynamic capabilities) and postprocessing. Features include staged construction, quasi-static solver for shrinkage and creep/relaxation problems.

StructurePoint

Phone: 847-966-4357 Email: info@structurepoint.org Web: www.StructurePoint.org Product: PCA-StructurePoint Engineering Software Description: Analysis and design software programs for the reinforced concrete buildings, bridges, tanks, and special structures including tilt-up and retail buildings. Work quickly, simply, and accurately using over 100 years of experience of concrete design and technology built into a suite of software programs and extensive support and consulting services.

Struware, LLC

Phone: 904-302-6724 Email: email@struware.com Web: www.struware.com Product: Struware Code Search Description: Calculates wind, snow and seismic loadings in accordance with the International Building Code, ASCE 7, and state building codes based on these codes.

All Resource Guides and Updates for the 2014 Editorial Calendar are now available on the website, www.STRUCTUREmag.org. Listings are provided as a courtesy. STRUCTURE® magazine is not responsible for errors. See more companies in the 2013 Annual Trade Show issue!