7 - 8. Consideration and causa

Question 1

5.1) What is the notion of consideration?

Answer 1

• English law doctrine
• For a contract to exist both parties must give something up
• Both offeror and offeree must promise something, related to latin phrase quid pro quo, reciprocity
• Ex: sales contract -> offeror gives up money, offeree gives up ownership

Question 2

5.2) When is consideration needed?

Answer 2

• When contract is made and when it changes
• Free acts are made and are not considered binding because there is no consideration for the person doing the act
• Requiring consideration for contract changes accounts for potential blackmail and duress

Question 3

5.3) What are the 5 main rules of consideration?

Answer 3

1) Promisee’s detriment and promisor’s benefit
- Person making the promise must agree to gain something
- Person receiving the promise must agree to lose something

2) Must “move from the promisee” but not necessarily to the promisor
- Person receiving the promise must agree to lose something, however, this loss does not have to be to direct benefit of promisor, can be for third party
- Ex: A pays B $100 in exchange for B cleaning C’s windows. B loses something to C’s benefit, but A pays.

3) Sufficient but not adequate
- Something in value in eyes of law must be given up, sufficient
- Economic value is irrelevant and thus it can be inadequate as long as it sufficient
- Ex: A gives up house in exchange for B giving him a price way lower than the market value

4) Past consideration ≠ good consideration
- Acts given up before a promise is made do not qualify as consideration
- Ex: If A saves B from drowning, B agreeing to give A a house does not make a binding agreement because what A gave up was in the past

5) Existing duties ≠ valid consideration
- Certain people have certain legal duties beyond contract law, thus, performance of these duties does not warrant consideration
- Existing public duties: A is called to be a witness at a trial, promised payment for showing up, A shows up but is not paid, no binding agreement because his public duty was to show up anyways
- Existing contractual duty: A is being driven by a crew and the crew disappears except the driver, A promises driver to pay him the rest of the crew’s cut if he keeps driving, A’s promise is not binding because the driver’s contractual obligation was already to get A to his destination

Question 4

5.4) What are the exceptions to consideration?

Answer 4

A. Deeds:
- Makes gratuitous acts binding by removing the need for consideration
- Signed by the person making the gratuitous act and attested by witness
- Usually used for donations

B. Promisory estoppel:
- Legal prohibition to allege or deny a fact in contradiction with one’s previous conduct, especially when another is in reliance of one’s previous conduct
- Ex: A tells B that C approved their contract, C is unable to later say contract is invalid
- Requisites: 1 - Contractual relationship must be present. 2 - Promisor must have clearly stated that they will not behave in contradictory manner. 3 - Promisee must be in reliance, due to their own detriment, of promisor. 4 - Must be unfair on promisee to go back on the promise. 5 - Does not create new obligations, just enforces existing ones

Question 5

5.5) What is causa? Why is it considered dead?

Answer 5

Definition:
- Reason to contract, ultimate goal parties pursue
- Objective causa: always the same (sales -> exchange of payment and ownership, employment -> exchange of salary and labor)
- Subjective causa: specific to party (sell something for money to buy son a present)

Death:
- Became redundant
- Other modern grounds can determine validity of contracts (fraud, blackmail, violation of societal values)
- France abolished causa in 2016 as a contract validity requirement it was deemed unclear and unnecessary