Consideration

Question 1

Consideration - general rule

Answer 1

An enforceable contract must be supported by consideration. Consideration consists of: (i) a bargained-for exchange between the parties; and (ii) an element of legal value to that which is bargained for. Legal value is present if the promisee has incurred a detriment (i.e., has done something she is under no legal obligation to do or has refrained from doing something that she has a legal right to do) or the promisor has incurred a benefit. To have a bargained-for exchange, the promise must induce the detriment, and the detriment must induce the promise. If something has already been given or performed before the promise is made, it will not satisfy the bargain requirement, because it was not given in exchange for the promise.

Question 2

Promissory estoppel

Answer 2

Under the majority view, consideration is not necessary to make an agreement at least partially enforceable where the facts indicate that the promisor should be estopped from not performing. Under the Second Restatement, a promise is enforceable to the extent necessary to prevent injustice if the promisor should reasonably expect the promise to induce action or forbearance and such action or forbearance is in fact induced.

Question 3

Preexisting Legal Duty

Answer 3

Consideration is a bargained-for exchange of something of legal value. Under the preexisting legal duty rule, the promise to perform a legal duty already owed to a promisor is not consideration.

Question 4

Gift consideration

Answer 4

There is no bargain when one party gives a gift to another.

Question 5

Modern exception to no consideration

Answer 5

Under a modern trend, some courts will enforce a promise lacking a bargained-for exchanged if:

1. it is based on a material benefit that was previously conferred by the promisee on the promisor, and
2. the promisee did not intend to confer the benefit as a gift.