Contract Law

Chapter 4 Lecture Notes

Consideration

            The purpose of this chapter is to illustrate legal consideration.  Most students have no problem with the idea of consideration if the contract concerns physical property or money, but many are confused by the concept that consideration may be a detriment incurred at the request of the other contracting party.           
            The Chapter Overview, as with all the chapters, provides an introductory note with respect to the legal concepts that will be discussed in the body of the chapter.  The purpose of the overview is to focus the student’s mind on the legal principles involved with consideration and to highlight the material that will be detailed in the text.                  
            Section B defines “consideration,” both as a benefit conferred and a detriment incurred.  This section has several examples of both categories of consideration, all taken from everyday life, and it would be helpful to have the student discuss the consideration he or she has given and received in his or her own contractual relationships.  Many students fail to realize how many contracts they actually enter into each day.              
            Section C delineates the most common circumstances in which the courts have determined that no consideration exists.  Probably the most difficult circumstance for the student to comprehend is an illusory promise.  The chapter contains several examples of such situation, but the difference between illusory promises, gifts, and actual consideration should be stressed and discussed at this point.              
            The following section concerns the sufficiency of the consideration, and the difference between nominal and sham consideration.  It is important to focus on the “legal” value of the consideration under the circumstances of the particular situation.  Point out that the mere dollar value of the consideration may be irrelevant to its sufficiency.  There are examples in this section underscoring this point.              
            Section E on Promissory Estoppel can be used to reinforce the material discussed with respect to illusory promises and gifts.  The three historical examples of promissory estoppel are discussed in this section; the instructor may want to have the students come up with their own examples of promissory estoppel.                     
            Special Agreements, Section F, gives examples of specific arrangements that are deemed enforceable even though they do not contain what would typically be considered legally sufficient consideration.  This section can be used as a starting point for a discussion of drafting simple contracts because of the special situations involved.                    
            The chapter continues with Sample Clauses.  These clauses highlight sections of contracts that contain consideration provisions and are followed by a short analysis of the clause.  As a practical exercise, the student can be asked to analyze the clause and then suggest changes for different situations.  In this fashion he or she will get some practice in simple draftsmanship.
       Following the Sample Clauses, the chapter has a Chapter Summary to reinforce all of the material discussed in the preceding sections.  The prose portion of the summary can be used as a quick review and refresher for the chapter material, and the Synopsis, which ends this portion of the chapter, provides an outline for the student that can be used as the basis of his or her notes for this section of the course.            
      The Key Terms section provides a short glossary of all the terms introduced in the chapter.  By having a glossary at the end of the chapter, the definitions are reinforced so that the student is comfortable using the terms in their proper legal context.