It has been suggested that this article or section be merged with Consideration under English law. (Discuss)

This page deals with Consideration in U.S. Law. Consideration under English law is dealt with separately.

Contract Law
Part of the common law series
Contract theory
Classical theory  · Promise theory
Consent theory
Contract formation
Offer and acceptance  · Mailbox rule
Mirror image rule  · Invitation to treat
Consideration
Defenses against formation
Lack of capacity to contract
Duress  · Undue influence
Illusory promise  · Statute of frauds
Non est factum
Contract interpretation
Parol evidence rule
Integration clause
Excuses for non-performance
Mistake  · Misrepresentation
Frustration of purpose  · Impossibility
Illegality  · Unconscionability
Accord and satisfaction
Rights of third parties
Assignment  · Delegation
Novation  · Third party beneficiary
Breach of contract
Anticipatory repudiation  · Cover
Exclusion clause
Fundamental breach
Remedies
Liquidated damages  · Penal damages
Specific performance  · Rescission
Other areas of the common law
Tort law  · Property law
Wills and trusts
Criminal law  · Evidence
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Consideration is a central concept in the common law of contracts. Under classical contract theory, consideration is required for a contract to be enforceable. (Modern contract theory has also permitted remedies on alternate theories such as promissory estoppel). Wikipedia does not have an article with this exact name. ... Consideration under English law means a promise that has been made under contract. ... Consideration under English law means a promise that has been made under contract. ... Image File history File links Legal portal image File history Legend: (cur) = this is the current file, (del) = delete this old version, (rev) = revert to this old version. ... A contract is any legally-enforceable promise or set of promises made by one party to another and, as such, reflects the policies represented by freedom of contract. ... This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... Contract theory is the body of legal thought that investigates normative and conceptual problems in contract law. ... Offer and acceptance analysis is a tool in contract law used to determine whether a contract exists between two parties. ... The mailbox rule or the postal acceptance rule is a term of common law contracts which determines when a contract has been formed where the parties are communicating via the mail. ... In the law of contracts, the mirror image rule states that an offer must be accepted exactly without modifications. ... In contract law, an invitation to treat is an action by one party which may appear to be a contractual offer but which is actually inviting others to make an offer of their own. ... Capacity is a legal term that refers to the ability of persons to make certain binding dispositions of their rights, such as entering into contracts, making gifts, or writing a valid will. ... Duress in the context of contract law is a common law defence, and if you are successful in proving that the contract is vitiated by duress, you can rescind the contract, since it is then voidable. ... Undue influence (as a term in jurisprudence) is an equitable doctrine that involves one person taking advantage of a position of power over another person. ... In contract law, an illusory promise is one that courts will not enforce. ... Statute of frauds - Wikipedia, the free encyclopedia /**/ @import /skins-1. ... This is a list of legal terms, often from Latin: A mensa et thoro A mensa et thoro, from bed and board. ... The parol evidence rule enacts a principle of the law of contracts that presumes that a written contract emodies the complete agreement between the parties thereto. ... c) The packing and logo of the products shall be complete without damage. ... In contract law a mistake is incorrect understanding by one or more parties to a contract and may be used as grounds to invalidate the agreement. ... In contract law, a misrepresentation is when a party to a contract makes a representation, warranting or promising something that is not in the terms of the contract, that has the effect of inducing a party in entering the contract, yet is revealed to be false. ... Frustration of purpose is a term used in the law of contracts to describe a defense to an action for non-performance based on the occurance of an unforseen event which makes performance impossible or commercially impracticable. ... Modal logic, or (less commonly) intensional logic is the branch of logic that deals with sentences that are qualified by modalities such as can, could, might, may, must, possibly, and necessarily, and others. ... An illegal agreement, under the common law of contract, is one that the courts will not enforce because the purpose of the agreement is to achieve an illegal end. ... Unconscionability is a term used in contract law to describe a defense against the enforcement of a contract based on the presence of terms unfair to one party. ... Accord and satisfaction is the purchase of the release from a debt obligation. ... An assignment is a term used with similar meanings in the law of contracts and in the law of real estate. ... Delegation is a term used in the law of contracts to describe the act of giving another person the responsibility of carrying out the performance agreed to in a contract. ... Novation, or its full title: Novation Electronic Music Systems, is an English company founded in 1992 and largely produces synthesizers. ... A third party beneficiary, in the law of contracts, is a person who may have the right to sue on a contract, despite not having originally been a party to the contract. ... Breach of contract is a legal concept in which a binding agreement or bargained-for exchange is not honored by one of the parties to the contract by non-performance or interference with the other partys performance. ... Anticipatory repudiation (or anticipatory breach) is a term in the law of contracts that describes a declaration by one party (the promissing party) to a contract that they do not intend to live up to their obligations under the contract. ... Cover is a term used in the law of contracts to describe a remedy available to a merchant buyer who has received an anticipatory repudiation of a contract for the receipt of goods. ... An exclusion clause is a term in a contract that seeks to restrict the rights of the parties to the contract. ... Fundamental breach, sometimes known as a repudiatory breach, is a breach so fundamental that it permits the aggrieved party to terminate performance of the contract, in addition to entitling that party to sue for damages. ... Liquidated damages is a term use in the law of contracts to describe a contractual term which establishes damages to be paid to one party if the other party should breach the contract. ... In the law of remedies, a specific performance is a demand of a party to perform a specific act. ... In contract law, rescission (to rescind or set aside) refers to the cancellation of the contract between the parties. ... In the common law, a tort is a civil wrong for which the law provides a remedy. ... Property law is the law that governs the various forms of ownership in real property (land as distinct from personal or moveable possessions) and in personal property, within the common law legal system. ... In the law, a will or testament is a document by which a person (the testator) regulates the rights of others over his property or family after death. ... The law of trusts and estates is generally considered the body of law which governs the management of personal affairs and the disposition of property of an individual in anticipation and the event of such persons incapacity or death, also known as the law of successions in civil law. ... Criminal law (also known as penal law) is the body of law that punishes criminals for committing offences against the state. ... The law of evidence governs the use of testimony (eg. ... This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... A contract is any legally-enforceable promise or set of promises made by one party to another and, as such, reflects the policies represented by freedom of contract. ... Contract theory is the body of legal thought that investigates normative and conceptual problems in contract law. ... Estoppel is a concept that prevents a party from acting in a certain way because it is not equitable to do so. ...

There are two common theories for consideration. The first is the "benefit-detriment theory", in which a contract must be either to the benefit of the promisor or to the detriment of the promisee to constitute consideration. The second is the "bargain theory", in which the parties subjectively view the contract to be the product of an exchange or bargain. The bargain theory has largely replaced the benefit-detriment theory in modern contract theory, but judges often cite both and unknowingly confuse the two models in their decisions. These theories usually overlap; in standard contracts, such as a contract to buy a car, there will be both an objective benefit and detriment (the buyer experiences a benefit by acquiring the car; the seller experienced a detriment by losing a car) and the subjective experience of entering into a bargain. However, there are certain contracts which satisfy one but not the other. For instance, a deal in which the promisee feels subjectively relieved, but hasn't actually gained any legal rights, might satisfy the bargain theory but not the benefit-detriment theory. Alternately, a deal in which an actor takes detrimental actions possibly in reaction to an offer, without having viewed the deal as a bargain, wouldn't be viewed as a contract under the law.

The main purpose of the shift from benefit-detriment to bargain theory is to reconcile consideration theory with other aspects of contract theory. For instance, courts will not inquire as to the adequacy of consideration. If someone honestly dislikes their car and wants to sell it for fifty dollars, the law will not consider this an invalid deal. However, the court will reject "consideration" that was not truly bargained for. Occasionally the court may refer to "adequate" or "valuable" consideration, but in reality the court is not examining the adequacy of consideration, but whether or not it was bargained for. Another term for this sort of non-bargained-for payment is nominal consideration. The traditional notion that courts won't look into the adequacy of consideration, an ancient notion in the English common law, doesn't square with the benefit-detriment theory (in which courts are implicitly analyzing if the parties are receiving a sufficient benefit) but does square with the bargain theory (in which only the subjective intentions of the parties are considered).

For example, in Fischer v. Union Trust Co., 101 N.W. 852, the court held that $1.00 paid in exchange for the sale of real property within the city of Detroit in 1902 was not "bargained for" by the seller, and thus the transaction was void. The point was NOT that the amount of money involved was too small to be adequate consideration, but that the seller did not convey the property in exchange for the buyer's promise to pay $1.00. There was no consideration, not because $1.00 was too small an amount to "count", but because the $1.00 offered the seller by the buyer did not induce the seller to part with the property.

There are three main purposes cited for the consideration requirement. The first is the cautionary requirement - parties are more likely to look before they leap when making a bargain than when making an off-the-cuff promise of a gift. The second is the evidentiary requirement - parties are more likely to commemorate, or at least remember, a promise made due to a bargaining process. The third is the channeling requirement - parties are more likely to coherently stipulate their specific desires when they are forced to bargain for them. Each of these rationales ensure that contracts are made by serious parties and are not made in error.

Certain other stipulations regarding consideration include the following:

• Past consideration is not valid. Something that is already done is done, and it does not change the legal position of the promisor. Any goods or services to be exchanged must be exchanged at or after the time of contract formation. However, a promise to pay a pre-existing debt or obligation IS enforceable.

• Preexisting duty does not count as consideration.

• An illusory promise, or one which the promisor actually has no obligation to keep, does not count as consideration. The promise must be real and unconditional. This doctrine rarely invalidates contracts; it is a fundamental doctrine in contract law that courts should try to enforce contracts whenever possible. Accordingly, courts will often read implied-in-fact or implied-in-law terms into the contract, placing duties on the promisor. For instance, if a promisor promises to give away a third of his earnings for the year, he has no actual obligation to do anything; if he earns nothing, a third of zero is zero. However, courts will generally read in an implied term that he will use reasonable efforts to try to gain income. Another, more modern approach to illusory promises is to treat them as "bargaining for a chance". Even though the promisor has no actual duties, the promisee may still benefit by the possibility that the contract may lead to the promisor fulfilling certain duties, and that possibility itself is beneficial.

• Liquidated debt, or a payment which is fixed and undisputed, cannot be negotiated for consideration. Unliquidated debt, or a payment which is disputed, can be used for consideration.

While the concept of consideration is not generally accepted in civil law systems, some recognize the similarity between consideration and cause, as some civil codes recognize that all contracts must have a cause, though this is not generally accepted. In contract law, an illusory promise is one that courts will not enforce. ... Civil law is a legal system derived from Roman law and commonly used in Europe. ... A civil code is a systematic compilation of laws designed to comprehensively deal with the core areas of private law. ...