Contracts-Consideration

A bargained for exchange. An exchange is “bargained for” if it is what is sought by both parties as the reason or motivation for their exchange.

Benefit/Detriment Theory: Traditional View

i) Benefit to the promisor OR detriment to the promisee.

Bargain for Exchange Theory (Quid-pro-quo); Modern View MSPE

i) Promise induces the detriment and the detriment induces the promise

• 1. Promise Made by the promisor?
• 2. Promise or Performance sought by the promisor?
• 3. Was there a promise or performance by promisee?
• 4. Promisee promise or performance in exchange for the promise made by promisor?

Mere appearance of Consideration is Insufficient-

I) Nominal- actual exchange of something small to appear as consideration (IE $1)

(1) Exception: nominal consideration OK for an option contract

II) Sham- fake exchange; parties "say" there is consideration but not actually exchange anything.

Court refuse to enforce nominal and sham consideration b/c there is no true bargain

• giving someone something for nothing. The
• promise is unenforceable even if a detriment is incurred b/c promise is not in exchange for anything.

A promise to do nothing. Appears to be a promise but is conditioned upon the promisor and no commitment is made. The offer is not definite so not consideration.

An act that must be completed before the acceptance of a contract.

Not consideration...