Consideration

The court in Currie v Misa[1] declared consideration to be a "Right, Interest, Profit, Benefit, or Forbearance, Detriment, Loss, Responsibility".

Forbearance to act, such as an adult promising to refrain from smoking, is enforceable only if one is thereby surrendering a legal right.

[2][3][4] Consideration may be thought of as the concept of value offered and accepted by people or organisations entering into contracts.

In common law it is a prerequisite that both parties offer consideration before a contract can be thought of as binding.

However, even if a court decides there is no contract, there might be a possible recovery under the doctrines of quantum meruit (sometimes referred to as a quasi-contract) or promissory estoppel.

[26] However, legislation, rather than judicial development, has been touted as the only way to remove this entrenched common law doctrine.

Lord Justice Denning famously stated that "The doctrine of consideration is too firmly fixed to be overthrown by a side-wind".

[27] The reason that both exist in common law jurisdictions is thought by leading scholars to be the result of the combining by 19th-century judges of two distinct threads: first the consideration requirement was at the heart of the action of assumpsit, which had grown up in medieval times and remained the normal action for breach of a simple contract in England and Wales until 1884 when the old forms of action were abolished; secondly, the notion of agreement between two or more parties as being the essential legal and moral foundation of contract in all legal systems, was promoted by the 18th-century French writer Pothier in his Traite des Obligations, much read (especially after translation into English in 1805) by English judges and jurists.

However, in common law systems the concept of culpa in contrahendo, a form of estoppel, is increasingly used to create obligations during pre-contractual negotiations.

For instance, if A offers B $200 to buy B's mansion, luxury sports car, and private jet, there is still consideration on both sides.

As a result, contracts in the United States have sometimes have had one party pass nominal amounts of consideration, typically citing $1.

The prime example of this sub-issue is where an uncle gives his thirteen-year-old nephew (a resident of the state of New York) the following offer: "if you do not smoke cigarettes or drink alcohol until your 18th birthday, then I will pay you $5,000".

In the subsequent lawsuit, the uncle wins, because the nephew, by U.S. criminal law, already had a duty to refrain from smoking cigarettes while under 18 and from drinking alcohol while under age 21.

For example, A agrees to paint B's house for $500, but halfway through the job A tells B that he will not finish unless B increases the payment to $750.

Pre-existing duties relating to at-will employment depend largely on state law.

If the same uncle had instead told his 13-year-old nephew the following offer: "if you do not smoke cigarettes, do not drink alcohol, swear or play cards for money (gamble) before your 21st birthday, then I will pay you $5,000".

However, the uncle would still be relieved from the liability if his nephew drank alcohol, even though that consideration is valueless, because it was paired with something of legal value; therefore, adherence to the entire, collective agreement is necessary.

Since there is no guarantee that A would win against B if it went to court, A may agree to drop the case if B pays the $5,000 compensatory damages.

The primary criticism of the doctrine of consideration is that, in its present form, it is purely a formality that merely serves to complicate commerce and create legal uncertainty by opening up otherwise simple contracts to scrutiny as to whether the consideration purportedly tendered satisfies the requirements of the law.