Consideration

Question 1

What is consideration?

Answer 1

○ Some right, interest, profit, or benefit accruing to the one party OR some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by another

○ Courts will not ask whether the thing which forms the consideration does in fact benefit the promisee or a third party, or is of any substantial value to any one. It is enough that something is promised, done, forborne, or suffered by the party to whom the promise is made

○ In general a waiver of any legal right at the request of another party is a sufficient consideration for a promise

○ Consideration means not so much that one party is profiting as that the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of he first

Question 2

Additional definition of consideration

Answer 2

A good consideration exists if one refrains from anything that he has a right to do, whether there is any actual loss or detriment to him or actual benefit to the promisor or not

Question 3

What is the bargain theory of consideration?

Answer 3

• Consideration must actually be bargained for as the exchange for the promise
• The bargain theory of consideration does not actually require that the parties bargain over the terms of the agreement what is required is that the consideration be in the relation of reciprocal conventional inducement
• It is not enough that the promisee has suffered a legal detriment at the request of the promisor. The detriment incurred must be the ‘quid pro quo’ or the ‘price’ of the promise and the inducement for which it was made

Question 4

Is the condition upon which a gift will be made sufficient consideration?

Answer 4

If the promisor merely intends to make a gift to the promisee upon the performance of a condition, the promise is gratuitous and the satisfaction of the condition is not consideration for a contract

e.g. A benevolent man says to a tramp - “if you go around the corner to the clothing shop there you may purchase an overcoat on my credit” - no reasonable person would understand that the short walk was requested as consideration for the promise

Question 5

Is a release from a claim (s) valid consideration?

Answer 5

If the plaintiff had no lawful claims to release it is not necessary consideration.

Release from imaginary claims is not valuable consideration for a promise.

However, if the claim is lawful it can serve as consideration.

Question 6

Is nominal consideration valid?

Answer 6

Many courts insist that merely nominal consideration-a peppercorn, for example-is not sufficient to constitute consideration.

Restatement Second - a mere pretense of bargain does not suffice, as where there is false recital of consideration or where the purported consideration is merely nominal. In such cases there is no consideration.

Question 7

What is adequate vs. sufficient consideration?

Answer 7

Some courts distinguish between adequate vs. sufficient consideration:

- Adequate Consideration:
	○ Comparative value of the promises of acts exchanged
	○ Courts are not concerned with this
- Sufficient Consideration
	○ Does it support the promise?
	○ Is not affected by value

Question 8

How does the The Second Restatement treat the distinction of adequate vs. sufficient consideration?

Answer 8

The Second Restatement has not preserved a distinction between adequate and sufficient consideration on the ground that it is confusing.

If a performance , such as the destruction of a legal relation, is bargained for, there is consideration, and if the requirement of consideration is met, there is no additional requirement…of equivalence in the values exchanged.

Question 9

If consideration did not induce the making of the promise, i.e. if some other reason like a moral obligation induced the promise, does this make the consideration invalid?

Answer 9

Restatement Second
- the fact that what is bargained for does not itself induce the making of a promise does not prevent it from being consideration for the promise.

• Unless both parties know that the purported consideration is mere pretense, it is immaterial that the promisor’s desire for the consideration is incidental to other objectives and even that the other party knows this to be so.

Class

• The general rule is that any benefit counts as consideration.
• If consideration does not induce the making of the promise it does not make the consideration invalid

Question 10

Can there be consideration if there was no intent to contract?

Answer 10

• The law does not create a contract where the parties intended none
• The law does not consider binding every exchange of a promise
• E.g. Reporters and sources do not ordinarily believe they are engaged in making a legally binding contract

Question 11

In cases dealing with intellectual property is novelty of the idea necessary to prove consideration?

Answer 11

Novelty of the idea is not required for the idea to serve as consideration. Rather it is sufficient to prove that the party to whom the idea was disclosed was not aware of the idea.

The lack of novelty in and of itself, does not demonstrate a lack of value. The buyer may reap benefits to a contract in a number of ways - by not having to expend resources to pursuing the idea through other channels or by having a profit-making idea implemented sooner rather than later