- The parties are each getting something of value; getting something in return. No contract if
there’s nothing of value to either parties. Something of benefit flowing to both parties,
doesn’t have to be money.
(a) Definition and Nature of Consideration
(b) Consideration vs. gratuitous promise
Consideration is a two-way promise. Gratuitous promise is a one-way promise; a promise
made without consideration; doesn’t form the basis of a binding contract. Becomes
irreversible if possession is exchanged (morphed into gift).
Duty of rescuers if you start with a rescue operation, you can’t make it worse.
(c) Adequacy of consideration
The amount of consideration going both ways doesn’t have to be equal (just has to be
something of benefit).
(d) Past Consideration
Past consideration is no consideration at all. A promise given with no consideration (a
(e) Performance of an Existing Duty
Performance of an existing contractual duty (already have a duty under a contract) cannot
form the basis of consideration for a new or revised deal.
(f) Contracts Under Seal
Exception to the rule that you need consideration going both ways. When a party signs
and seals it, there doesn’t need to be consideration going both ways.
(g) Promissory Estoppel
Exception to rule that you need consideration going both ways. Also called equitable
estoppel / injurious reliance when one party makes a gratuitous promise, and the other
party to whom the promise is made relies on that promise to its detriment then that
gratuitous promise will be enforceable as if it were a contract or had adequate
consideration. Equity says it would be unfair to say “sorry I’m not bound”. Can only be used
as a shield not a sword, in other words, can be used as a defense not an attack.
(h) Gratuitous Reduction of Debt
On the basis of gratuitous promise, when a party agrees to reduce a debt and gets nothing
in return, then it’s nothing but a gratuitous promise. Party who agreed to reduce the debt
can sue for the b