Aim: Why is “Consideration” an essential element in contracts?
Consideration: the exchange of benefits of benefits and detriments in a contract. A valid contract must have each party receive a benefit and suffer a detriment.
I. Type of detriments
a. giving up something you have a legal right or title to.
b. promise to do something (service agreement).
c. Forbearance- giving up your legal right to something that is owed to you “postponed”
II. Agreements without consideration
a. promise to make a gift- because it lacks benefit/ detriment
b. promise to obey the law, it lacks consideration and thus is not enforceable
c. preexisting duty/ job- not valid
4. Past Consideration: all consideration must be acknowledged and approved. An individual can not seek consideration for something done in the proof, unapproved.
5. Illusory promise- what appears at first to be valid consideration is not.( purchasing seasonal crops)
Adequacy of Consideration- the court will not hear cases involving the “fairness” of the consideration.
Exception: unconscionable- gross inadequacy (old person lacks knowledge) take advantage of someone
Special applications for consideration
1. Partial Payment of a debt,
“Past due- if partial payment is made on a past due debt, the owed party can still seek balance of payment.
2. Current contract- if owed party agrees to partial payment final payment is complete.
Extension of time- if there is no new benefits and detriments to the agreement the owed party is not bound by the extension of time.
Agreements that are enforceable, that lack consideration
Pledges (charities) are legally binding.
Promissory Estoppel- based on a promise- when a promise leads an individual to an expense, the promise becomes enforceable.