Consideration (Contracts)
Consideration is the bargained-for exchange of legal value between parties that supports enforceability of a contract, requiring both a bargain (exchange) and legal detriment or benefit.
Exam Tip
Consideration = bargained-for legal detriment. Past consideration is NO consideration. Pre-existing duty rule: doing what already obligated to do is not consideration.
What is Consideration?
Consideration is what makes a promise enforceable. It requires a bargained-for exchange where each party incurs a legal detriment or receives a legal benefit.
Elements
| Element | Requirement |
|---|---|
| Bargained-For | Sought by promisor, given by promisee |
| Legal Detriment | Doing something not obligated to do, or refraining from something entitled to do |
What Is NOT Consideration
| Invalid Consideration | Why |
|---|---|
| Past Consideration | Already performed before promise |
| Pre-existing Duty | Already legally obligated |
| Illusory Promise | No actual commitment |
| Moral Obligation | Not legally enforceable |
Study This Term In
Related Terms
Promissory Estoppel
Promissory estoppel is an equitable doctrine that enforces a promise lacking consideration when the promisor should reasonably expect the promise to induce reliance, the promisee actually and reasonably relies, and enforcement is necessary to avoid injustice.
Accord and Satisfaction
Accord and satisfaction is a contract doctrine where parties agree to accept different performance (accord) than originally promised, and upon completion of that substitute performance (satisfaction), the original obligation is discharged.