Chapter 15: Consideration

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• Chapter 15 Consideration

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What is Consideration?

• Consideration is what each party gives up to the
  other in the making of the agreement it is the
  price of the contract for each side.
• That price may be doing an act, refraining from
  an act, or merely promising to do or to refrain.
• A promise to do what one is already obligated to
  do is usually not valid consideration.
• Because consideration is the price given to
  obtain the promise, past benefits already
  conferred on the promisor usually cannot be
  consideration.
• Consideration is defined as a detriment to one
  party while also being a benefit to the other.

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Consideration is Required

• A promise is not binding if there is no
  consideration for the promise.
• In a bilateral contract, the promise of each
  party must be supported by consideration. If
  either promise is not supported, it is not a
  contract.
• Although consideration is required to make a
  promise binding, the unsupported promise is not
  illegal. The parties are free to perform their
  agreement, but the courts will not help either of
  them because there is no contract.

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Examples of Consideration
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Gifts and Consideration
A gift does not have consideration, so a promise
to make a gift is not enforceable. A completed
gift, however, cannot be rescinded for lack of
consideration.
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Consideration and Promises
Exceptions to ConsiderationCharitable
SubscriptionUniform Commercial CodeSealed and
Written InstrumentsPromissory Estoppel
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Adequacy of Consideration

• When the promisor obtains the consideration
  specified for the promise, the law is not
  ordinarily concerned with the value or adequacy
  of that consideration.
• Exceptions are sometimes made in the case of
  fraud or unconscionability and under consumer
  protection statutes.

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Problems in Consideration

• If the consideration is illegal, there is no
  consideration, and the promise is not binding.
• When the promisor does not receive the price
  promised for the promise, there is a failure of
  consideration, which constitutes a breach of the
  contract.