Consideration

Consideration Definition

(Law Lat. comideratio). The material cause which moves a contracting party to enter into a contract. 2 Bl. Comm. 443. The price, motive, or matter of inducement to a contract, whether it be the compensation which is paid, or the inconvenience which is suffered by the party from whom it proceeds. A compensation or equivalent. A cause or occasion meritorious, requiring mutual recompense in deed or in law. Viner, Abr. Consideration (A). The quid pro quo, that which the party to whom a promise is made does or agrees to do in exchange therefor. 120 U.S. 197. Mutuality of obligation, as to each party, is the obligation imposed by the contract on the other party. As applied to contracts, consideration and obligation are really convertible terms, though frequently used as correlatives. The essence of every contract is its mutuality, and, in necessary consequence, the obligation of each party is the consideration running to the other, while the entire obligation of the contract is the mutual considerations. The motive for entering into a contract, and the consideration of the contract, are not the saine. Nothing is consideration that is not regarded as such by both parties. It is the price voluntarily paid for the promisor’s undertaking. Expectation of results will not constitute a consideration. Beach, Cent, § 147. Consideration is the very life and essence of a contract, and a contract or promise for which there is no consideration cannot be enforced at law. Such a promise is called a nudum pactum (ex nudo pacto non oritur actio), or nude pact, because a gratuitous promise to do or pay an3rthing on the one side, without any compensation on the other, could only be enforced, in the Roman law, when mafle (or clothed) with proper words or formalities, pactum verbis prescriptis vestitum. 7 Watts & S. (Pa.) 317; Plowd. 308; Smith, Lead. Cas. 456; Doctor & Stud. 2, c. 24; 3 Call (Va.) 439; 7 Conn. 57; 1 Stew. (Ala.) 51; 5 Mass. 301; 4 Johns. (N. Y.) 235; 6 Yerg. (Tenn.) 418; Cooke (Tenn.) 467; 6 Halst. (N. J.) 174; 4 Munf. (Va.) 95; 11 Md. 281; 25 Miss. 66; 30 Me. 412. Considerations, according to their general nature, are:
(1) Valuable, being one which confers some benefit on the party at whose instance it is made, or upon a third party, at his request, or some detriment sustained at the instance of the party promising by the party to whom the promise is made.
(2) Good, being one of blood, natural affection, or the like. Beach, Cont. § 148; Chit. Cont. 7; Doctor & Stud. 179; 1 Selw. N. P. 39, 40; 2 Pet. (U.S.) 182; 5 Cranch (U.S.) 142, 150; 1 Litt. (Ky.) 183; 3 Johns. (N. Y.) 100; 14 Johns. (N. Y.) 466; 8 N. Y. 207; 6 Mass. 58; 2 Bibb (Ky.) 30; 2 J. J. Marsh. (Ky.) 222; 2 N. H. 97; Wright (Ohio) 660; 5 Watts & S. (Pa.) 427; 13 Serg. & R. (Pa.) 29; 12 Ga. 52; 24 Miss. 9; 4 111. 33; 5 Humph. (Tenn.) 19; 4 Blackf. (Ind.) 388; 3 C. B. 321; 4 East, 55. Valuable considerations are divided by the civilians into four classes, which are given, with literal translations : Do ut des, I give that you may give, facio ut facias, I do that you may do, fado ut des, I do that you may give, do ut facias, I give that you may do. They are also:
(3) Executed or past, being those done or received before the obligor made the promise.
(4) Executory, being those by which it is undertaken to do something in the future. 95 U.S. 683; 6 Colo. 318. They are also:
(5) Concurrent, being those which arise at the same time, or where the promises are simultaneous.
(6) Continuing, being those which are executed only in part.
(7) Equitable, being moral considerations.
(8) Moral, being such as, though not valuable, are of moral obligation, and are sufScient to support an executed contract. 18 S. E. 421.
(9) Gratuitous, being those which are not founded on such a deprivation or injury to the promisee as to make the consideration valid at law. 2 Mich. 381.
(10) Illegal, being agreements to do things in contravention of the common or of statute law.
(11) Impossible, being those which cannot be performed. Considerations have been further classified as express or implied, accordingly as they are stated in the contract, or left to be inferred by law, but the distinction is based rather on the manner of contracting than on the nature of the consideration. See Contract. (Lat. it is considered by the court). A formula used in giving judgments. A judgment is the decision or sentence of the law, given by a court of justice, as the result of proceedings, instituted therein for the redress of an injury. The language of the judgment is not, therefore, that it is decreed, or resolved, by the court, but that it is considered by the court, consideratum est per curiam, that the plaintiff recover his debt, etc.

(This definition of Consideration Is based on the The Cyclopedic Law Dictionary . This definition may need to be proofread.) For other definitions of it, read Consideration in the Legal Dictionary here.

Practical Information

The price, motive, or matter inducing a party to make a contract. The surrender of any legal right in return for the promise of some benefit; the “price” paid for what is received. See Consideration in contracts (in U.S. law). See also mortgage (in U.S. law), Statement and Clauses, Mortgage Consideration.

Consideration in Contracts

Consideration, is the quid pro quo (something given or received for something else) between the contracting parties in the absence of which the law will not enforce the promise or promises made.

In American law, binding contract is when the contract contains a set of mutual promises in which each party pledges to give up something to the benefit of the other.

The existence of consideration is determined by examining whether the person against whom a promise is to be enforced (the promisor) received something in return from the person to whom he made the promise (the promisee). That may seem a simple enough question. But as with much in the law, the complicating situations are never very far away. The “something” that is promised or delivered cannot just be anything: a feeling of pride, warmth, amusement, friendship; it must be something known as a legal detriment—an act, a forbearance, or a promise of such from the promisee. The detriment need not be an actual detriment; it may in fact be a benefit to the promisee, or at least not a loss. At the same time, the “detriment” to the promisee need not confer a tangible benefit on the promisor; the promisee can agree to forego something without that something being given to the promisor. Whether consideration is legally sufficient has nothing to do with whether it is morally or economically adequate to make the bargain a fair one. Moreover, legal consideration need not even be certain; it can be a promise contingent on an event that may never happen. Consideration is a legal concept, and it centers on the giving up of a legal right or benefit.

Consideration has two elements. The first, as just outlined, is whether the promisee has incurred a legal detriment. (Some courts—although a minority—take the view that a bargained-for legal benefit to the promisor is sufficient consideration.) The second is whether the legal detriment was bargained for: did the promisor specifically intend the act, forbearance, or promise in return for his promise? Applying this two-pronged test to the three examples given at the outset of the chapter, we can easily see why only in the second is there legally sufficient consideration. In the first, Lou incurred no legal detriment; he made no pledge to act or to forbear from acting, nor did he in fact act or forbear from acting. In the third example, what might appear to be such a promise is not really so. Betty made a promise on a condition that Lou come to her house; the intent clearly is to make a gift. Betty was not seeking to induce Lou to come to her house by promising the book.

There is a widely recognized exception to the requirement of consideration. In cases of promissory estoppel, the courts will enforce promises without consideration. Simply stated, promissory estoppel means that the courts will stop the promisor from claiming that there was no consideration. The doctrine of promissory estoppel is invoked in the interests of justice when three conditions are met: (1) the promise is one that the promisor should reasonably expect to induce the promisee to take action or forbear from taking action of a definite and substantial character; (2) the action or forbearance is taken; and (3) injustice can be avoided only by enforcing the promise.

Timko served on the board of trustees of a school. He recommended that the school purchase a building for a substantial sum of money, and to induce the trustees to vote for the purchase, he promised to help with the purchase and to pay at the end of five years the purchase price less the down payment. At the end of four years, Timko died. The school sued his estate, which defended on the ground that there was no consideration for the promise. Timko was promised or given nothing in return, and the purchase of the building was of no direct benefit to him (which would have made the promise enforceable as a unilateral contract). The court ruled that under the three-pronged promissory estoppel test, Timko’s estate was liable.Estate of Timko v. Oral Roberts Evangelistic Assn., 215 N.W.2d 750 (Mich. App. 1974).

Consideration in Foreign Legal Encyclopedias

Link	Description
Consideration	Consideration in the World Legal Encyclopedia.
Consideration	Consideration in the European Legal Encyclopedia.
Consideration	Consideration in the Asian Legal Encyclopedia.
Consideration	Consideration in the UK Legal Encyclopedia.
Consideration	Consideration in the Australian Legal Encyclopedia.

For starting research in the law of a foreign country:
legal definitions and legal terms related to Consideration.

Meaning of Consideration

In plain or simple terms, Consideration means: The cause, price or impelling influence which induces a party to enter into a contract.

Consideration Explained

References

Consideration (Enforcement)

This section introduces, discusses and describes the basics of consideration. Then, cross references and a brief overview about Enforcement is provided. Finally, the subject of Negotiable Instruments in relation with consideration is examined. Note that a list of cross references, bibliography and other resources appears at the end of this entry.

Consideration (Letters of Credit)

This section introduces, discusses and describes the basics of consideration. Then, cross references and a brief overview about Letters of Credit is provided. Finally, the subject of Commercial Law in relation with consideration is examined. Note that a list of cross references, bibliography and other resources appears at the end of this entry.

Consideration

Consideration

Consideration Definition

Practical Information

Consideration in Contracts

Consideration in Foreign Legal Encyclopedias

Meaning of Consideration

Consideration Explained

References

See Also

Consideration (Enforcement)

Consideration (Letters of Credit)

Resources

See Also

Further Reading (Articles)

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