Chapter 4

PROMISES BINDING WITHOUT CONSIDERATION

ChapterScope

This chapter covers the exceptions to the rule requiring consideration. Here are the key exceptions, situations in which a promise can be enforceable even though there is no consideration for it:

• Promises to pay past debt: Most courts hold that a promise to pay a past debt that is no longer legally enforceable is binding without consideration, if it is in writing.
• Promise to pay for benefits received: Similarly, a promise to pay for services already received is enforceable in many situations.
• Modification: The UCC provides that a modification of a contract for the sale of goods does not have to be supported by consideration.
• Option contract: An option contract (i.e., a promise to hold an offer open for a set amount of time) usually does not need consideration, if the option is in a writing signed by the offeror, and recites that consideration has been paid for the option.
• Guaranty contract: A guaranty (i.e., a promise to pay the already-existing debt of another person) is usually enforceable if it is in a writing that (1) is signed by the guarantor, and (2) states that consideration has been paid for the guarantee.
• Promissory estoppel: Under the “promissory estoppel” doctrine, a promise will be enforceable without consideration if: (1) the promisee acts or forbears in reliance on the promise and (2) this action or forbearance was reasonably foreseeable by the promisor. The doctrine is often applied in a situation where there has been a promise to make a gift.

I. INTRODUCTION

A. Types of promises that may not need consideration: This chapter covers the circumstances in which a contract may be enforceable even though it is not supported by consideration. It also discusses the situations in which the doctrine of promissory estoppel can serve as a substitute for consideration.

1. Listing of situations: The above ChapterScope lists the most important types of promises that may be enforceable without consideration.