Chapter 11

Consideration
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Consideration
In contract law, something of legal
value that has been bargained for
and given in exchange by the
parties.

Consideration Example
When Mike is 16, his Mom says Mike, youve
been such a good son, Im going to give you a
brand new jeep on your 18th birthday.
His 18th birthday comes and
she doesnt buy him a jeep.
He sues her for the jeep.
Will he win? Why or why not?

Kelsoe v. International Wood Products

Summary of facts
What did the trial court do?
Whats the issue?
What did the Supreme Court of Alabama
decide? Why?
Discussion
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What can be bargained for?

It can be for another promise.
It can be for an action
(performance).
It can be for a benefit to the promisor.
It can be for a detriment to the promisee.
It can be for a promise to do something.
It can be for a promise to refrain from doing
something.

Hamer v. Sidway
Summary of facts
How did trial court rule?
Whats the issue?
What did the court decide and why?
Discussion

Adequacy of Consideration
Courts generally do not look at whether the
consideration was adequate to the
promise given.

They dont want to second guess the

bargaining decisions of the parties. The
question of adequacy is for the parties,
not the courts.
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Exchanges That Fail to Meet Consideration

Requirements

(1) Illusory promises

(2) Past consideration
(3) Preexisting duties

(1) Illusory Promises

An illusory promise is one that does not bind
the promisor to do anything.
I promise to buy all the sugar I want.
I promise to buy your bike for $350 if I
feel like it
An illusory promise cannot
serve as consideration.
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Culbertson v. Brodsky
YOU BE THE JUDGE
Summary of facts
Whats the issue?
Vote
Courts decision
Discussion

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(2) Past Consideration

No consideration at all.

Because it was not bargained for in

exchange, past consideration is not valid
consideration.

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(3) Preexisting Duties

A promise to perform a preexisting duty, whether
public or private, cannot constitute
consideration because the promisor
already had an obligation to do it.
Example of preexisting duty:
The duty to perform your civil servant
job (public duties)
-- A contractual obligation

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Preexisting Duties: The General Rule

Under the common law, an agreement to
modify an existing contractual obligation
requires some new consideration to be
enforceable.
Otherwise, a person could be forced to agree to
a change in contract terms that is
disadvantageous to them because they have
made plans and commitments.
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Preexisting Duties: Exceptions to the

General Rule
Additional work

Contract rescission and substitution

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Modification of contracts under the UCC

Under the UCC, an agreement to modify a
contract for the sale of goods requires no
consideration to be enforceable!
The modification can even be ORAL even
though the original contract was WRITTEN!
Subject to good faith and no unconscionability

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