How to Analyze Consideration on a Contracts Essay ('The Bargained-For Exchange')

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How to Analyze Consideration on a Contracts Essay ("The Bargained-For Exchange")

CONTRACT FORMATION

A traditional, enforceable contract is formed when there is: (1) mutual assent between the parties (offer + acceptance); and (2) consideration.

CONSIDERATION

In most jurisdictions, an agreement is supported by consideration when: (1) there is a bargained-for exchange between the parties; and (2) the exchange establishes a legal detriment to the promisee.

A minority of courts hold that a legal detriment to the promisee OR a benefit to the promisor is sufficient if there is a bargained-for exchange. However, most courts only focus on whether the promisee incurred a legal detriment, irrespective of a benefit to the promisor.

THE BARGAINED-FOR EXCHANGE

A bargained-for exchange requires reciprocal inducement – that the promise induces the promisee to incur his legal detriment and that the legal detriment induces the promisor to make his promise.

LEGAL DETRIMENT

A legal detriment generally consists of: (1) promising to do something the party has no prior legal duty to do; (2) performing an action that the party is not otherwise obligated to undertake; or (3) refraining from exercising a legal right which the party is otherwise entitled to exercise.

Promising not to sue (settlement of a legal claim) will act as a legal detriment so long as the party promising not to sue has an honest and good faith belief in the validity of the claim.

EXAMPLES OF INVALID CONSIDERATION

Gift promises and conditional gifts are NOT consideration (e.g., A promises to give B his truck if B will pick the truck up from A's house. A's promise to give B his truck is not induced by B coming to pick the truck up. Thus, A is not bargaining for B to come. This is a conditional gift, not bargained-for consideration.).

Past consideration is NOT consideration (e.g., A's truck catches fire as A is demonstrating the truck’s safety features. B rushes over and extinguishes the flames saving A's life. Grateful, A promises to pay B $100 for the rescue. This is past consideration, not bargained-for consideration.).

A pretense of consideration or nominal consideration is NOT consideration (e.g., A and B are cousins. A wishes to give B his truck that is valued at $10,000 as a gift for B's birthday. Attempting to form an enforceable contract, A "sells" B his truck for $1 to meet the consideration requirement. This is a pretense of consideration, not bargained-for consideration.).

An illusory promise is NOT consideration. An illusory promise occurs when the promisor fails to clearly commit to the deal (e.g., A promises to buy B's truck if “he feels like it.” This is an illusory promise, not bargained-for consideration.).

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This video did more for me than 3 hours of Themis. Very light, clear and understandable.

MrCharlesHickman

Wow my Contracts final is Monday and I promise you this and the other videos have taught me more than my professors

arijohn

Thank you so much for taking the time to explain all this to us for free. It has helped me immensely! You remind me of Sal Khan, so altruistic.

khachakw

Thank so much, as a 1L you just made my understanding a concept I had to reread several times to having it click within minutes ..

KhadijahMichelle

So glad I found you. My course sounds and reads like stereo instructions. You brought this to life for me, and it finally makes sense.

michellehughes

your videos are so good. You repeat some of the material a few times and that saves me from having to rewind. I am watching your vids to prepare for an upcoming essay quiz and this is soooo helpful. Thank you, professor!

FinkelsteinPalestine

I’m so happy I found your videos! They’ve helped me so much more than actual class

emilygellatly

I love that my professor puts these to watch as assignments with our chapters. He is so easy to get and keeps my attention. Love

talliesengwong

Past consideration 2 exceptions: (1) new promise to pay a past debt that is now barred (i.e., SOL has run) can provide valid consideration if it is made in writing or partially performed, and (2) new promise to pay for benefits previously received at the promisor's request, or in an emergency can be binding without consideration.

cascam

Love these videos. Very helpful & thoroughly explains the concepts.

janetwilliams

After watching the offer and acceptance video, how would you analyze the consideration in the essay. For example, after we find that there is an acceptance, do we state there is also consideration, which creates a valid contract.

anaamadi

This was an awesome video. I wish my K Prof made it this easy!

robertoescaler

Thanks sir.
I got a question here for you.
On date 27/April/2020 Mr. John Peter offered an automatic machine gun (AK47) to Mr Mathew Smith at the price 2000$. On date 28/April/2020 Mr.Mathew Smith received the gun and agreed that the price amount will be paid on 27/may /2020.
On date 28/ may / 2020 Mathew Smith failed to pay the agreed price of the automatic machine (AK47) to Mr john peter.
Assumed that you're a lawyer; Mr john peter came to you seeking advice:
1/ can he sue Mr .Mathew Smith claim for the price? Why.
2/ what's your advice to him.

robbayugusuk