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CONTRACTS (O'BYRNE)
INTRODUCTION TO CONSIDERATION
I.
Why are some kinds of promises enforced and others are not?
NIECE can afford $1,000 for a car.
AUNT to NIECE in writing states: "I promise to give you $1,000 to buy a car.
On strength of this promise, NIECE buys a car for $2,000
Why should Aunt’s promise be enforceable?
II.
The doctrine of consideration
An agreement is not enforceable absent consideration.
This means that the promisee (the person to whom the promise is made) must
‘purchase’ the promise from the promisor (the person making the promise.) If
the promise isn’t ‘purchased,’ it is gratuitous and therefore not legally
enforceable.
Seller promises to deliver widgets at a fixed price and on a specified
date.
Buyer promises to pay that fixed price on delivery.
Note: The Seller is both a promisor and a promisee. Likewise, the Buyer
is both a promisor and a promisee.
Per Treitel:
1.
consideration is mainly about reciprocity: "something of value in the eye
of the law" must be given for a promise in order to make it enforceable as
a contract.
2.
“consideration is either some detriment to the promisee (in that he may
give value) or a benefit to the promisor (in that he may receive value).
Usually, this detriment and benefit are merely the same thing looked at
from different points of view. Thus payment by a buyer is consideration
for the seller’s promise to deliver and can be described as a detriment to
the buyer or as a benefit to the seller; and conversely delivery by a seller is
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consideration for the buyer’s promise to pay and can be described either
as a detriment to the seller or as a benefit to the buyer. These statements
relate to the consideration for the promise of each party looked at
separately. For example, the seller suffers a ‘detriment’ when he delivers
the goods and this enables him to enforce the buyer’s promise to pay the
price. It is quite irrelevant that the seller has made a good bargain and so
gets a benefit from the performance of the contract. What the law is
concerned with is the consideration for the promise – not the consideration
for a contract.”
II.
Examples illustrating the
donative/gratuitous promise
difference
between
a
contract
example #1:
A:
I promise to mow your lawn when you go on
vacation.
B:
O.K.
example #2:
A:
I promise to mow your lawn when you go on
vacation.
B:
O.K. I promise to pay you $5.00.
example #3:
B:
I promise to pay you $5.00 if you mow my
law when I go on vacation.
example #4:
B:
I promise to pay you one cent for mowing my
lawn when I go on vacation.
A:
O.K. I promise to mow your lawn.
and
a
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C.
Examples of kinds of consideration
1. Exchange of promises
• example #2
• example #4 (re: nominal consideration)
2. Doing the thing requested (ie: performance)
• example #3
III. Unilateral v. Bilateral Contracts
Per Black's Law Dictionary
Unilateral contract: "one in which one party makes an express engagement or
undertakes a performance, without receiving in return any express engagement or
promise of performance from the other....Essence of a `unilateral' contract is that
neither party is bound until the promisee accepts the offer by performing the proposed
act....It consists of a promise for an act, the acceptance consisting of the performance of
the act requested, rather than the promise to perform it.
Bilateral contract: "a contract in which the contracting parties are bound to fulfil
obligations reciprocally towards the other....Contract formed by the exchange of
promises in which the promise of one party is consideration supporting the promise of
the other as contrasted with a unilateral contract which is formed by the exchange of a
promise for an act.
Compare example #2 to example #3.
IV. Promises under Seal
If a promise is under seal, “there is no need for there to be consideration moving from
either party towards the other” (per Fridman, The Law of Contract.)
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