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CHAPTERASSESSMENTSection 8.1 Consideration● Consideration is the exchange of benefits anddetriments between parties to an agreement. Abenefit is something that a party was not previouslyentitled to receive; a detriment is a losssuffered. Consideration has three key characteristics:(1) promises must involve the concept of abargained-for exchange; (2) something of valuemust be involved; and (3) the benefits anddetriments promised must be legal. An agreementinvolves a bargained-for exchange when apromise is made in return for another promise,an act, or a promise not to act. The law has nospecific value requirements on consideration.Therefore, a promise to help a friend clean herroom can be considered something of valuepromised. In regard to legality, a party cannotagree to give up something that he or she doesnot legally own. Nor can a party promise to stopdoing something that is illegal as consideration.● There are three types of consideration: (1) yougive something that you have the legal right tokeep; (2) you do something that you have thelegal right not to do; and (3) you refrain fromdoing something that you have the legal right todo. Money, property, services, promises not tosue, and charitable pledges are some commonforms of consideration.● There are instances in which a problem occursregarding consideration. A genuine dispute overthe amount of money owed could occur.Additionally, a party with all of the power mighttake advantage of the other party, in which casethe resultant contract is deemed void.● The following are some principles pertaining toconsideration: (1) a party will offer money,goods, or services in exchange for anotherparty’s promise or performance; (2) generally,the courts do not get involved in determininghow much consideration is enough; (3) forsomething to amount to consideration, the actperformed or promised must be legal; (4) if aperson pays a debt in advance, it is deemed to beconsideration; and (5) because many charitiesdepend upon contributions, the courts enforcecharitable pledges as if they were contracts.Section 8.2 Agreements withoutConsideration● Agreements enforceable without considerationinclude promises under seal, promises afterdischarge in bankruptcy, debts barred by thestatute of limitations, promises enforced bypromissory estoppel, and options.● The doctrine of promissory estoppel involves aperson promising to do something in exchangefor your action or forebearance, and your relyingon that promise and changing your position in asignificant way to your detriment. In these cases,a sense of fairness will compel a court to enforcethe promise, although there is no consideration.This enforcement is based on the doctrine ofpromissory estoppel.● Agreements that are unenforceable withoutconsideration include illusory promises,promises of future gifts, promises of legacies,promises based on past consideration, promisesbased on preexisting duties, and socialengagements.● Past consideration is consideration given for apromise or an act that took place in the past, andis not regarded as sufficient by the courts. If aperson is already under a legal obligation to dosomething, a promise to do that same thing iscalled a preexisting duty and is also not deemedsufficient consideration.180 Unit 2: Entering Into Contracts