Consideration

There's a Virgin Mobile cell phone commercial I've seen recently where Wyclef Jean is walking out of his limo when a middle-aged woman asks for his autograph. He signs her paper...and then she unrolls it to reveal that he signed a rather lengthy contract. Cut to Jean, hard at work, vacuuming the woman's house.

After my first semester at law school, I can think of three reasons offhand why such a contract would never be enforced. Fraud would be a slam dunk, but there might be some problems proving it. Unconscionability wouldn't have any problems of proof, but in general, this is a losing argument in court. Ah...But lack of consideration, that's an argument that has no real problems of proof, and is pretty certain to kill a contract like the one mentioned above.

The doctrine of consideration simply states that the courts are not willing to enforce all contracts. Promises of gifts, even if in writing and signed, are not the kind of thing courts are interested in.

Courts are only willing to enforce bargains, where each party does something in exchange for what the other does. So if I promise to sell you a shirt, and you promise to pay me $10, that's a contract. If I promise to give you a shirt, and you don't promise anything in return, that's a nothing.

So in the commercial I mentioned, it seems that Wyclef Jean is giving everything to the women, but not getting anything in return. But that's not an enforceable contract. That's just a promise of a gift.

There are a few issues that complicate this a bit.

For instance, in most cases the consideration itself won't be analyzed to see if it's sufficient. That means that if we have a contract where I sell you my favorite shirt for $10,000, the courts won't try to determine if this was a good bargain. A deal's a deal, and as long as both sides are getting something, that's enough for the courts to enforce a contract.

But what if the difference in value is obvious? Suppose that I promise to pay you $100, and in return you will pay me one cent. (This was an actual contract. The parties involved wanted to make a promise of a gift into a contract that would be enforced.) This is nominal consideration, an attempt to find a loophole in the law, and so courts won't enforce this type of contract either. It would be different if I were paying $100 for a particular penny. In that case we'd go back to the default rule. Maybe I'm a coin collector, or place more value on it than others for some other reason.

So I suppose if the lady in the commercial were a lawyer, and had promised to pay $50 in the contract she had Jean sign, consideration wouldn't help much. Of course, there's still fraud and unconscionability. And even if both of those failed (which is unlikely), you still can't force specific performance for a personal services blah blah blah blah...

Like many legal issues, consideration blends into a bunch of other topics. I've tried to separate it and keep it comprehensible at the same time, but I may have failed. Please /msg me with any questions.

Also, I should note that this writeup is for the United States and (I believe) England. Scotland in particular has no requirement of consideration for a valid contract. See evilrooster's w/u in contract. I have no idea what other countries do. Thanks evilrooster and lj.

Plasma tells me that in commonwealth nations, including England and Australia, contracts will be enforced absent consideration if they are written and meet certain formalities. This type of document is known as a deed. See Cyan de Funk's writeup in gratuitous promise for more information. To the best of my knowledge, no such document type exists in the United States.

Oh yes, and IANAL, so proceed at your own risk.

Con*sid`er*a"tion (?), n. [L. consideratio: cf. F. considration.]

1.

The act or process of considering; continuous careful thought; examination; contemplation; deliberation; attention.

Let us think with consideration. Sir P. Sidney.

Consideration, like an angel, came. Shak.

2.

Attentive respect; appreciative regard; -- used especially in diplomatic or stately correspondence.

The undersigned has the honor to repeat to Mr. Hulseman the assurance of his high consideration. D. Webster.

The consideration with which he was treated. Whewell.

3.

Thoughtful or sympathetic regard or notice.

Consideration for the poor is a doctrine of the church. Newman.

4.

Claim to notice or regard; some degree of importance or consequence.

Lucan is the only author of consideration among the Latin poets who was not explained for . . . the Dauphin. Addison.

5.

The result of delibration, or of attention and examonation; matured opinion; a reflection; as, considerations on the choice of a profession.

6.

That which is, or should be, taken into account as a ground of opinion or action; motive; reason.

He was obliged, antecedent to all other considerations, to search an asylum. Dryden.

Some considerations which are necessary to the forming of a correct judgment. Macaulay.

7. Law

The cause which moves a contracting party to enter into an agreement; the material cause of a contract; the price of a stripulation; compensation; equivalent.

Bouvier.

⇒ Consideration is what is done, or promised to be done, in exchange for a promise, and "as a mere advantage to the promisor without detriment to the promisee would not avail, the proper test is detriment to the promisee."

Wharton.

© Webster 1913.