Consideration Requirements for Enforceable Contracts
Consideration is the exchange element that distinguishes enforceable contracts from mere promises. Tested heavily on the bar exam and in 1L contracts courses, it requires a bargained-for exchange of legal value. Understanding what counts—and what doesn't—as valid consideration is essential for contract analysis.
Interactive Deck
5 CardsWhat is illusory consideration?
Is pre-existing duty valid consideration?
Master this topic effortlessly.
Study G helps you master any topic effortlessly using proven learning algorithms and smart review timing
Download Study GFrequently Asked Questions
What is the difference between consideration and a gift?
Consideration requires a bargained-for exchange—each party gets something of value. A gift is a one-sided promise with no return exchange, making it unenforceable without a deed.
- Gifts: no legal obligation
- Consideration: creates binding obligation
Can nominal consideration (e.g., $1) support a contract?
Generally yes under traditional doctrine—courts don't evaluate adequacy of consideration. However, token consideration for a grossly unequal exchange may signal a disguised gift and be unenforceable in some jurisdictions.
What happens if consideration fails?
If consideration is absent or fails, the contract is generally unenforceable as a simple promise. Courts may still enforce it under promissory estoppel if the promisee reasonably relied on the promise to their detriment.