Contract Law: Consideration
For a contract to be valid and enforceable, there must be consideration.
“A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the courts. Courts will not ask whether the thing which forms the consideration does in fact benefit the promisee or a third part or is of any substantial value to anyone… In general, a waiver of any legal right at the request of another party is a sufficient consideration or promise. Consideration means not so much that one party is profiting as the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of the first.” Hammer v. Sidway, 124 N.Y. 538 (1891).
Essentially this recital states that in order to determine whether or not consideration was made, courts will look at what rights, if any, were given up by the promisee – the person to whom the promise is made. Courts will rarely examine the benefit received by the promisor – the person who made the promise – in establishing consideration.
When speaking of the detriment suffered by the promisee, we are referring to a legal detriment. The loss of any legal right is said to be a legal detriment.
The next step to analyze the enforceability of a contract is determining whether or not there was a reciprocal inducement aka bargain. While consideration is a required element of an enforceable contract, consideration alone is insufficient to make a contract enforceable. For a contract to be enforceable, the consideration must be bargained for. This is called the bargained for principle.
Kirksey v. Kirksey outlines what may or may not establish a bargain, however, courts today would find differently. Applying modern contract law to Kirksey, courts would find the parties to have established an implied-in-law contract and award damages to the plaintiff, because the consideration was bargained for.
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