Twomey

1
Twomey JenningsBUSINESS LAW

• Chapter 15
• Consideration

2
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.

3
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.

4
Examples of Consideration
5
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gift, however, cannot be rescinded for lack of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.
6
Consideration and Promises
Exceptions to ConsiderationCharitable
SubscriptionUniform Commercial CodeSealed and
Written InstrumentsPromissory Estoppel
7
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.

8
Special Situations

• Pre-existing Legal Obligations.
• Promising to do what has already been agreed to
  is not consideration.

• Past Consideration.
• Moral Obligations.

9
Exceptions to Consideration

• Charitable Subscriptions.
• Pledges to Churches.
• Uniform Commercial Code.
• Abolishes consideration.
• Promissory Estoppel/Detrimental Reliance.