Formation of Contract: Consideration

What is Consideration? Consideration is an element generally required for an enforceable contract. Consideration reqires the giving of something in exchange for performance or the promise of performance. bascially it is a promise for a promise. Example: I promise to mow your lawn if you promise to pay me $10.00 to mow the lawn. It has to be a bargained for exchange and can not be a gift.

Consideration analysis requires us to look at several factors including the following:

Adequacy vs. Sufficiency of Consideration:

Adequacy-irrelevant unless the contract is a bogus contract.

Sufficiency of consideration. Bargained for exchange Benefit or detriment analysis Insufficient if: Moral Obligation-but see Restatement section 86 Past consideration and the Pre-existing duty Rule (Add something or rescind contract) Pre-existing debts, must add something Public servants May-economic duress But-unanticipated circumstances Restatement 89 , & UCC 2-209(1) Gratuitous promises and Illusory promises Must limit future in some way Cancel at will-unless notice or conditioned event No duty-court can imply: e.g. best efforts Requirements output contracts OK-2 306(1) No consideration OK if Firm offers Promise to pay a discharged debt Promise to perform an avoidable contract UCC modifications Preliminary Estoppel

1. Promise
2. Reasonably calculated
3. Induces act or reliance
4. Enforced only if will prevent injustice Sect. 90 But-traditional rule only enforces
1. promises to convey land where promises improves
2. gratuitous promises by bailees
3. gratuitous charitable promises
4. gratuitous promises w/in families.

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