Consideration Forum

[abenson25]

I am studying for a practice exam I have in Contracts this week. My professor is awful and spends very little time explaining anything, and instead screams at us for not knowing if things are a 'matter of law.' I feel like I know very little about contract, and what i do know, I am getting myself from books. So for some reason, I am having an issue with consideration. My understanding is that someone promises to do something, which then results in the promisee doing something with the belief what was promised will be done. Is that correct? And that contracts can be formed with this alone?

[Always Credited]

I am studying for a practice exam I have in Contracts this week. My professor is awful and spends very little time explaining anything, and instead screams at us for not knowing if things are a 'matter of law.' I feel like I know very little about contract, and what i do know, I am getting myself from books. So for some reason, I am having an issue with consideration. My understanding is that someone promises to do something, which then results in the promisee doing something with the belief what was promised will be done. Is that correct? And that contracts can be formed with this alone?

Your current understanding fits more closely under the theory of promissory estoppel than consideration. I think you have the two confused. Promissory estoppel is used when there is a LACK OF consideration. Consideration itself is the part of a claissic contract where the promisor makes his promise as part of a bargain for (in exchange for) the promisee's suffering of a legal detriment.

[abenson25]

I am AWFUL with contracts. What exactly does that mean then? Sorry. For some reason I am having a hard time with consideration...

[Always Credited]

Generally, in a classic contract you need an offer + acceptance + consideration (apply the definition posted above) in order for the contract to be binding.

If, however, you have a promise given by D that P would foreseeable rely on, and P reasonably relies on that promise with action or forbearance, and that reliance results in P's detriment, and the only way to fix that injustice is to uphold the promise....that is Promissory Estoppel.

If any of this is confusing or you aren't sure of the proper applications/flexible applications of the doctrines, consult the K's E&E and commercial outlines ASAP.

[abenson25]

Nope, that makes sense. I think i was just starting to get them confused in my head. Thanks!

[jkay]

Get the Blum E&E.

[onthecusp]

I am studying for a practice exam I have in Contracts this week. My professor is awful and spends very little time explaining anything, and instead screams at us for not knowing if things are a 'matter of law.' I feel like I know very little about contract, and what i do know, I am getting myself from books. So for some reason, I am having an issue with consideration. My understanding is that someone promises to do something, which then results in the promisee doing something with the belief what was promised will be done. Is that correct? And that contracts can be formed with this alone?

Just think of consideration as "reciprocal inducement". Both parties causing a detriment to themselves in exchange for something.

[RickyMack]

consideration is 1) a bargained for exchange in which 2) two parties either receive a benefit or incur a legal detriment.

an example A asks B to mow their lawn for $40. B incurs a detriment in the form of a performance they were not required to do (i.e. mowing the lawn) in exchange for $40, A loses $40 in exchange for the benefit of having their lawn mowed.

there are a few situations which are not consideration a)gratuitous gifts, as there is no bargain element b)pre-existing duty (as extra consideration must be applied) c) nominal forms or mere recital of consideration (you cannot exchange a home for $1) d)past actions (there is no new consideration or it must have a bargain for future detriment or forbearance).

that's just basic cause there's tons of nuances like in hammer v. sidway you can bargain for a benefit that does not directly benefit one of the parties making the agreement, as well as forbearance of a legal right being sufficient consideration. you can't exchange a home for $1, but courts do not typically concern themselves with the adequacy or fairness of a bargain, so $25k could possibly serve as sufficient consideration (partial gift payments are supported). promissory estoppel could also be used to enforce a K that lacks consideration.

essentially, an exchange of promises needs to be made and they must be real and sought for.

[robin600]

for consideration just remember - bargained for exchange, for promissory estoppel- just remember reliance on a promise and a moral obligation to fulfill the promise.

[Grizz]

OP, to clarify some things above.

To make a K, you need consideration and mutual assent.

1) You do not need offer and acceptance, per se. In many, many cases an offer and acceptance will indicate mutual assent. However, if the parties act like they have a K, the court may imply one.

2) You don't have to show a benefit or detriment to demonstrate consideration, though often there will be benefits and detriments. All you have to show is that the parties were induced by the other's promise. This is the "bargained for exchange" of consideration.

[onthecusp]

OP, to clarify some things above.

To make a K, you need consideration and mutual assent.

1) You do not need offer and acceptance, per se. In many, many cases an offer and acceptance will indicate mutual assent. However, if the parties act like they have a K, the court may imply one.

2) You don't have to show a benefit or detriment to demonstrate consideration, though often there will be benefits and detriments. All you have to show is that the parties were induced by the other's promise. This is the "bargained for exchange" of consideration.

Find one. Lets discuss it. Find me ONE case where there is no "manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent is invited and will conclude it."

AND / OR

A manifestation of mutual assent, on the part of two or more persons, keeping in mind that this mutual assent may manifest itself by way of written agreement, oral agreement, or performance/conduct.

[kalvano]

OP, to clarify some things above.

To make a K, you need consideration and mutual assent.

1) You do not need offer and acceptance, per se. In many, many cases an offer and acceptance will indicate mutual assent. However, if the parties act like they have a K, the court may imply one.

There is always going to be some type of offer and acceptance, even if they don't come right out and say it. If you haven't found it, you aren't looking hard enough.

You have to have some type of offer and some type of acceptance in order to enter into a contract.

[RickyMack]

1) You do not need offer and acceptance, per se. In many, many cases an offer and acceptance will indicate mutual assent. However, if the parties act like they have a K, the court may imply one.

I am also somewhat confused by this statement. Why would an offeree act like they are in a K if there was no offer made? I could understand if not all the elements of an offer are present, but something needs to induce the offeree into action. Likewise if the other party acts like they are in a K wouldn't that mean the offeree has begun performance, which is a form of acceptance?

[09042014]

OP, to clarify some things above.

To make a K, you need consideration and mutual assent.

1) You do not need offer and acceptance, per se. In many, many cases an offer and acceptance will indicate mutual assent. However, if the parties act like they have a K, the court may imply one.

2) You don't have to show a benefit or detriment to demonstrate consideration, though often there will be benefits and detriments. All you have to show is that the parties were induced by the other's promise. This is the "bargained for exchange" of consideration.

Find one. Lets discuss it. Find me ONE case where there is no "manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent is invited and will conclude it."

Hobbs v Massasoit Whip Co.

[savagedm]

A simple, down and dirty definition of Consideration:

That which is bargained for and given in exchange for a promise.

[Grizz]

A simple, down and dirty definition of Consideration:

That which is bargained for and given in exchange for a promise.

This.

[onthecusp]

OP, to clarify some things above.

To make a K, you need consideration and mutual assent.

1) You do not need offer and acceptance, per se. In many, many cases an offer and acceptance will indicate mutual assent. However, if the parties act like they have a K, the court may imply one.

2) You don't have to show a benefit or detriment to demonstrate consideration, though often there will be benefits and detriments. All you have to show is that the parties were induced by the other's promise. This is the "bargained for exchange" of consideration.

Find one. Lets discuss it. Find me ONE case where there is no "manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent is invited and will conclude it."

Hobbs v Massasoit Whip Co.

Restatement 69
Acceptance by Silence or Exercise of Dominion
(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:
a. Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
b. Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.
c. Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.
(2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him.

[Renzo]

OP, to clarify some things above.

To make a K, you need consideration and mutual assent.

1) You do not need offer and acceptance, per se. In many, many cases an offer and acceptance will indicate mutual assent. However, if the parties act like they have a K, the court may imply one.

2) You don't have to show a benefit or detriment to demonstrate consideration, though often there will be benefits and detriments. All you have to show is that the parties were induced by the other's promise. This is the "bargained for exchange" of consideration.

Find one. Lets discuss it. Find me ONE case where there is no "manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent is invited and will conclude it."

Hobbs v Massasoit Whip Co.

Restatement 69
Acceptance by Silence or Exercise of Dominion
(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:
a. Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
b. Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.
c. Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.
(2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him.

Sorry, but you still just got pwnt. The fact that the law has evolved to imply an offer and acceptance from past conduct doesn't mean that there really, actually was an offer and acceptance.

[Stanford4Me]

Why is everyone focused on consideration as a "detriment" to one party. Consideration can be a detriment to the offeree or a benefit to the offeror. Correct me if I'm wrong.

[Renzo]

Why is everyone focused on consideration as a "detriment" to one party. Consideration can be a detriment to the offeree or a benefit to the offeror. Correct me if I'm wrong.

If you can think of a situation where the benefit to one party does not come at the detriment of another, you probably have thought of a situation where there is no valid contract. An example right of the top of my head would be a promise to pay money that is already owed: the payment of money would benefit the offeree, but there's no detriment to the offeror since she was already obligated to pay, and thus no contract.

[Stanford4Me]

Why is everyone focused on consideration as a "detriment" to one party. Consideration can be a detriment to the offeree or a benefit to the offeror. Correct me if I'm wrong.

If you can think of a situation where the benefit to one party does not come at the detriment of another, you probably have thought of a situation where there is no valid contract. An example right of the top of my head would be a promise to pay money that is already owed: the payment of money would benefit the offeree, but there's no detriment to the offeror since she was already obligated to pay, and thus no contract.

Hamer v. Sidway. Though it could be argued the uncle "benefitted" from the emotional comfort gained by knowing his nephew wasn't smoking, etc. I think the court focused more on the detriment to the nephew.

I don't think your example shows that no detriment = no contract, it has more to do with the idea that past consideration =/= new consideration, or you can't contractually agree to do something you're already obligated (by contract) to do.

Edit: And now I'm questioning my knowledge of consideration. Guess I'll look at that this weekend.

[GeePee]

Why is everyone focused on consideration as a "detriment" to one party. Consideration can be a detriment to the offeree or a benefit to the offeror. Correct me if I'm wrong.

If you can think of a situation where the benefit to one party does not come at the detriment of another, you probably have thought of a situation where there is no valid contract. An example right of the top of my head would be a promise to pay money that is already owed: the payment of money would benefit the offeree, but there's no detriment to the offeror since she was already obligated to pay, and thus no contract.

Hamer v. Sidway. Though it could be argued the uncle "benefitted" from the emotional comfort gained by knowing his nephew wasn't smoking, etc. I think the court focused more on the detriment to the nephew.

I don't think your example shows that no detriment = no contract, it has more to do with the idea that past consideration =/= new consideration, or you can't contractually agree to do something you're already obligated (by contract) to do.

Edit: And now I'm questioning my knowledge of consideration. Guess I'll look at that this weekend.

Hamer v. Sidway has a detriment to both parties. When you give money, you have that much less money.

Renzo's example isn't the best, but he's right: promises where there is absolutely no detriment to a party are generally considered gratuitous, and therefore not enforceable as contracts.

[Renzo]

Renzo's example isn't the best, but he's right: promises where there is absolutely no detriment to a party are generally considered gratuitous, and therefore not enforceable as contracts.

My example wasn't very good, but I didn't want to think up a better one. My more important point was that if you think up a counter-example, you'll find that something makes that not a contract--past consideration, gratuitous promises, etc.

[Grizz]

Why is everyone focused on consideration as a "detriment" to one party. Consideration can be a detriment to the offeree or a benefit to the offeror. Correct me if I'm wrong.

I think it's best to call it a "bargained-for exchange" than talking about benefits and detriments and leave it at that.

[09042014]

What I'm not clear on, is cases where the promisor doesn't actually benefit, but the promisee is harmed. Like paying someone to run 20 miles.