Contracts: Consideration

Consideration need not be economically equal or adequate from an objective perspective. Courts ordinarily permit competent parties to decide the value of their own exchange. Therefore, the $50 can be legally sufficient even though the bicycle is worth considerably more.

A disputed debt involves a genuine disagreement about whether anything is owed or about how much is owed. An honest disagreement may support a compromise because both sides surrender part of their claims or defenses.

Promissory estoppel can make a promise enforceable despite the lack of traditional consideration. It applies when the promisor should reasonably expect the promise to induce action or forbearance, the promise actually does so, and enforcement is necessary to prevent injustice.

Paying only part of a debt that is undisputed and already due generally does not provide new consideration for a promise to forgive the remainder. The debtor was already obligated to pay the full amount.

These doctrines provide alternative legal grounds for enforcing a promise or imposing an obligation when the ordinary requirements of consideration are absent. Promissory estoppel focuses on reliance, quasi-contract focuses on unjust enrichment, and public policy focuses on broader policy objectives.

The contractor was already contractually obligated to complete the original work. Merely promising to do what the contractor had already agreed to do generally does not provide new consideration for the owner’s promise to pay more.

Under the pre-existing duty rule, performing—or promising to perform—something that one is already legally obligated to do does not provide new consideration. The person has not undertaken a new legal detriment.

Past consideration refers to an act or benefit provided before the other party makes the relevant promise. Because the earlier act was not induced by the later promise, it generally is not part of a bargained-for exchange.

A quasi-contract, also called a contract implied in law, may be imposed to prevent unjust enrichment. Because Kai received necessary services while unable to agree to them, the law may require Kai to pay their reasonable value even though the parties did not form an express contract.

A gift is given voluntarily without requiring something in exchange. Because consideration depends on a bargained-for exchange, a simple promise to make a gift ordinarily lacks consideration.

Under UCC Article 2, an agreement modifying a contract for the sale of goods does not depend on new consideration in the traditional way. The modification must instead be made in good faith.

The ordinary pre-existing duty rule can create a consideration problem when a party merely promises to perform an existing duty. Under UCC Article 2, however, a good-faith modification to a sale-of-goods contract does not require new consideration.

Promissory estoppel is a substitute for consideration based on foreseeable and actual reliance, together with the need to prevent injustice. Acts, forbearance, and return promises can themselves constitute traditional consideration.

Past services and purely moral obligations generally do not satisfy the bargained-for-exchange requirement. However, limited exceptions or enforcement principles may apply when necessary to prevent injustice.

Courts generally look for legal sufficiency, not exact economic equality. The exchanged performances or promises do not ordinarily need to be of equal financial value, as long as each side provides something legally sufficient.