Defining Legal Detriment
"Legal detriment" is a widely-offered definition for consideration when it comes to contracts. The term itself is a bit baffling as it only makes sense when used with its other half of a legal "benefit." …The presence of both legal "detriment" and "benefit" is used to quantify the value of consideration in a contract.
And like most legal terms, this one breaks down into two parts. The first part of "legal detriment" is "legal" and this means that you and the other party who are vested in the contract must be of legal age to enter into the deal. If neither party is of legal age, under the law, then the value of the contract cannot be determined. The second part of "legal detriment" is "detriment." Basically, this means that you have given up or "suffered" some detriment as a result of entering into the contract. This can be anything including time, effort, fees, or even something you have done for someone else as a favor. For instance , let’s say you decide to help your friend out with a project instead of going to work and you agree to perform the task for $50. In doing so, you have given up your own money ($50 in lost wages) and expended effort on your friend’s behalf – all of these can be classified as "legal detriment." In addition, you also have a legal "benefit" in this scenario. Your friend has agreed to pay you for doing a favor and this can be classified as your "legal benefit."…
There are many different real-life scenarios where "legal detriment" can be used to determine the extent of the value of a contract. While you may not use the term with much frequency in conversation unless you are talking about contracts, it is a helpful way to think about "give" and "take." Here are a few different examples of "legal detriment" in action: …From the examples above you can see how "legal detriment" can mean many different things and this is just the beginning.
Understanding Legal Detriment in Contractual Agreements
Legal detriment is particularly important in the law of contracts. Many states require each party to a contract to suffer a legal detriment in order for the contract to be enforceable. In essence, a contract cannot be enforced unless each party has suffered a legal detriment.
The legal detriment must be caused by actions of the promisor to modify the legal relationships between them and the promisee. Legal detriment can involve some sort of exchange where one party performs an action that either 1) does not benefit them, or 2) involves them giving up something of value. The promisor must suffer a legal detriment in order for performance of an act to be binding.
Legal detriment is essential for a valid contract. Thus, the elements of consideration must involve giving, receiving, gaining, or losing something. For the consideration to be legally binding, it must be real and low in monetary value. If something is only detrimental to one party, it is not legally binding. The lack of legal detriment could mean absent any potential reward, the party that is already suffering will continue to be in a state of suffering.
Real-Life Examples of Legal Detriment
A legal detriment is said to be one thing that is needed for the application of an otherwise legitimate contract. Legally, the existence of a legal detriment is necessary in order to enforce a contract. The key point of contention in a legally binding contract and a not legally binding contract is the weakness of the consideration. The legal detriment must be good enough to outweigh the countervailing legal benefits.
To understand how a legal detriment can be in the form of legal benefit, it is worthwhile looking at a few examples that demonstrate the concept.
Case 1
In Datasouth Computer Corporation v. Three Dimensional Vending Corporation 1996, the court found that an expectation of a future benefit in exchange for the thing promised to be transferred is insufficient to constitute a legal detriment into the future.
Case 2
In Commonwealth v. Hartline 1978, the court held that even an act that is subsequently regretted if it has caused no harm to the promisor than a legal detriment is a legal detriment.
Case 3
In Harris v. Watson 1946, the court ruled that even a change of mind that was never acted upon prevailed as a legal detriment.
Case 4
In Hurst v. Wailes 1954, the court ruled that the hope for the future is a legal detriment if it has already been acted upon.
Case 5
In Anderson v. Frye 1953, the court held that a legal detriment that has not adversely changed the position of either party is sufficient for the enforcement of the contract.
Case 6
In Gilbert v. National Bank 1990, the court held that expectancy alone is insufficient to create a binding agreement.
Case 7
In Overhuls v. Tollestrup 1994, the court ruled that expectancy is a legal detriment if it involves property and the interest in it. It must be immediately conveying some form of interest.
Case 8
In Fowler v. McMillan 1982, the court ruled that a legal detriment can be anything that has any legal value.
Case 9
In Eary v. Telco Credit Union 1975, the court upheld the decision that for a legal detriment to be effective it must be real and in good faith.
Case 10
In Israel v. Allstate Insurs. 1962, the court ruled that a seemingly small benefit is not an insufficient legal detriment if it has cost time or money.
Legal Detriment and Legal Benefit: The Distinction
Legal detriment and legal benefit appear to be opposites, as their etymologies suggest. Legal detriment means something has been given up, while legal benefit suggests a gift. However, under the principle of consideration in a legal agreement, the two exist in tandem, each respective to the other. While legal detriment generally means something of value lost or given up by a party in a contract, legal benefit implies it is a valued thing that the other party receives in return.
For an agreement to be considered legally binding in the eyes of the law, both parties must demonstrate their respective detriment to enter into or perform their part of the deal . Detriment can sometimes imply negative connotations, like harm, damage or violation, but a detriment does not need to be negative to be considered. Even a positive detriment, like leaving your job to go to school, is still a legal detriment. Still, a legal benefit must exist for the detriment to deem the consideration sufficient for a legal agreement and enforceable under law.
Although legal detriment and legal benefit seem to oppose one another, they are vital parts of every valid and legally binding contract. If meant to be valid and legally enforceable under state laws, the actions of the parties subject to the agreement must meet the legal definition of consideration, meaning an exchange of value has taken place.
Contextualizing Legal Detriment in Legal Disputes
The presence of legal detriment can be pivotal when determining the outcome of commercial disputes. It can, for example, influence whether a particular agreement will be enforced or set aside. As it connotes that something will be given up or sacrificed by one party for the benefit of another, it is a concept which may have considerable bearing on the validity of contracts, the launch of litigation or the ability to settle.
Even in the absence of consideration, there are instances where legal detriment has been found. These include where: Employers too, may be in breach of contract where they expose employees to adverse situations without protection or compensation in circumstances where the employee can be said to have sustained a detriment because of the actions or omissions of the employer.
Whilst the requirement of legal detriment has been "refined" over the years, the principal relevance of the term remains. That is, there must be a movement away from something in order to create the concept of consideration – also called ‘movements’ by some judges.
Common Misunderstandings of Legal Detriment
A common misconception about legal detriment is that it relates only to losses. By definition, a detriment is an amount that is lost; however, a detriment can also take the form of giving something up. A detriment may encompass the promise to perform a deed promised, which involves sacrificing a present right, or the use of an existing asset. Simply because you do not lose something, does not mean you have not suffered a legal detriment . Another misconception pertains to whether or not a legal detriment must be the sole inducement by one party to induce an act or promise by the other party. The detriment does not need to be the only inducing factor to satisfy the requirement for consideration. It is also a common misconception that consideration must be of equal value to the promise. Consideration need not be of equal or even comparable economic value to the promise. Courts frequently uphold contracts where the consideration is merely "peppercorn."