What Is Consideration In law;5 Rules You Must Know

Consideration in law is required in a contract. Consideration is something of value that is a benefit to one party or a loss to the other party. It is the inducement to the contract. It is the reason, cause, motive, or price that induces a contracting party to enter into a contract. Consideration may be a benefit conferred or agreed to be conferred upon the promisor or some other person, or a detriment suffered or to be suffered by the promisee or some other person. Consideration may be the giving up of a legal right; e.g., the right to go through bankruptcy.

What Is Consideration In law;5 Rules You Must Know

A promise not to sue on a claim may be consideration. Consideration must be bargained for; e.g., if you do something for me, I will do something for you. (I will wash your car if you promise to pay me $5.00. Washing the car is the consideration for the promise to pay $5.00. Promising to pay $5.00 is the consideration for washing the car.) A promise to make a gift is not consideration and is not enforceable; eg., Jones promises to give Smith $100 next Tuesday. The promise by Jones is not enforceable, because there is no consideration by Smith. However, an executed gift cannot be set aside for lack of consideration; e.g., Jones gives the SIOO to Smith and then requests Smith to give back the money. Smith can keep the money.

Essentials Elements of Consideration In Law

As An Act Consideration

The general rule is that a contract must be supported by consideration to be valid and legally enforceable. However, the rule has received criticism, and modern law tends to relax the requirement and to expand the exeel B. AN Acr AS CONSIDERATION In a unilateral contract, the promise by the offeror is the consideration for the act or forbearance by the offeree. For example, a sheriff promises a reward for the capture of a criminal. The consideration moving from the sheriff is the promise to pay the reward, and the consideration moving from the offeree is the act of capturing the criminal, Or an uncle promises his nephew the sum of $5,000 if the nephew does not smoke until he is 30 years of age. The uncle’s consideration is promising to pay and the neph- ew’s consideration is giving up the legal right to smoke.


In a bilateral contract, the promise ofone party is the consideration for the promise of the other party. Where mutual promises are made, the one furnishes a sufficient consideration to an action on the other, For example, S promises to sell his car to B, and B promises to pay S $400 for it. The agreement is binding, since both sides have furnished consideration (i.e., their mutual promises).


A proposal by a seller to furnish to a buyer at a specified price all the of a certain kind that the buyer may want or desire during a certain period is considered an illusory offer (misleading’, which dcps not, upon acceptance, result in an enforceable contract. The reason is that the offeree may not want any gocxis during the and hence is not bound to buy any particular amount. Thus, there is no mutuality of obligation, and hence the contract is not enforceable. Where the proposal is to furnish all the goods of a certain kind that the other party may need in a certain business for a definite period, acceptance results in a binding contract.


As a general rule, so long as the consideration is of some value, however slight, it will be sufficient to sustain a contract in the absence of fraud or unconscionable conduct. The inadequacy is for the parties to consider at the time Of making the agreement and not for the court when it is sought to be enforced. For example, a promise of a nephew to name his first son after his uncle is consideration for the uncle’s promise to pay the nephew $5,000. Where the price is so inadequate as to shock the conscience of the court, inadequacy alone may furnish sufficient grounds for granting relief. For example, the seller makes a contract with the buyer to sell a parcel of real estate for $5,000. However, unknown to the seller, the land is really worth $20,000 at the time the contract is made. Before the seller delivers a deed to the buyer, he learns of the true value of the land and refuses to deliver the deed. The buyer sues the seller for specific Performance .

The seller defends on the ground that the consideration offered by the buyer is grossly inadequate. The court will examine the consideration and, finding it grossly inadequate, will not order specific performance. Moreover, the existence of gross inadequacy of consideration may indi- cate fraud, misrepresentation, duress, undue influence, mistake, unconscionability, or overreaching by a dominant party in a fiduciary relationship, in which case the court will grant relief. In some states (e.g., California Civil (hie Section 3391), the Courts may refuse to order specific performance on the basis of inadequacy of consideration without a showing that the inadequacy was gross. Adequacy is a question for the jury or other trier of the facts. The consideration does not necessarily have to measure up to the value of the (e.g., eagerness to sell may explain the discrepancy).


past consideration is not sufficient to sustain a promise. Acts or forbear- ances previously performed cannot be consideration for a new promise. For example, Smith has worked for Jones the past year receiving his salary each week. Jones tells Smith he is so pleased with Smith’s work that tomorrow he is going to give Smith $100 as compensation for Smith’s excellent work. The promise by Jones is not enforceable, because there is no consideration by Smith, His past excellent performance was paid for and is not sufficient to sustain the new promise by Jones. When Jones made the promise to pay the $100, Smith should have made a promise to do something for Jones (e.g., turning off the lights when he leaves at the end of the day).


Generally, a moral obligation cannot be consideration. For example, a nurse without expectation of payment cared for D, an indigent who lived in  linois. for one month before his death. T, a friend from California, learned of the nurse’s care at the funeral and the next day called the nurse and told her that he was going to give her $5,000 for her services. This promise is unenforceable, since it is based on a moral obligation. It is merely a promise to make a gift.

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