Consideration is what separates a promise a court will enforce from one it will not. It is a bargained-for exchange: each side must give something of legal value, and each side's promise or performance must be the price of the other's. A gift promise fails not because it is generous but because nothing was sought in return. The doctrine is about the structure of the deal, not its fairness.
Elements
- Legal value. Each party gives up something, either a benefit to the other side or a legal detriment to itself, and giving up a legal right counts.
- Bargained for. The promise was made to induce the return performance, and the return performance was given to induce the promise.
- Mutuality of obligation. A promise that leaves one side free to do nothing at all is illusory and will not support a contract.
- No adequacy review. Courts do not price the exchange. Gross disparity matters only as evidence of fraud, duress or unconscionability.
Leading cases
- Hamer v. Sidway: a nephew who gave up drinking, smoking and gambling in exchange for a promised payment gave consideration, because surrendering a legal right is enough.
- Kirksey v. Kirksey: a brother-in-law's invitation to come live on his land was treated as a gratuitous promise, with the move a condition of receiving the gift rather than the price of it.
- Batsakis v. Demotsis: a badly one-sided wartime loan was still enforceable, because courts do not measure whether the exchange was a good deal.
Where students go wrong
The most common error is calling anything the plaintiff did consideration. Ask whether the promisor asked for it. Conduct that merely allows a gift to be received, like walking to the bank to collect a check, is a condition, not a bargain.
The second error is missing past consideration. Something already done before the promise was made cannot be the price of it, because nobody could have bargained for a completed act. A few jurisdictions enforce such promises on a moral obligation theory, but that is an exception you must name, not the rule.
The third is forgetting the pre-existing duty rule. Doing what you were already contractually bound to do is not new consideration for a promise of more money, though the UCC allows good faith modification of a sale of goods without it.
FAQ
Does consideration have to be money?
No. It can be a promise, an act, a forbearance, or the surrender of a legal right. What matters is that it was bargained for, not what form it takes.
Is a peppercorn really enough?
As a matter of doctrine, yes, because courts do not weigh adequacy. A nominal recital of consideration that nobody ever intended to pay is a different problem and is often treated as a sham.
What happens if there is no consideration?
The promise is unenforceable as a contract, but reliance may still get the plaintiff a remedy through promissory estoppel, and restitution may be available where the defendant received a benefit.
Related terms
Working through this in your own casebook takes longer than reading it here. Syllume starts from your syllabus and turns each assigned case into a brief you can study from.