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Elements Of Consideration

It would be unfair for courts to hold people to every promise that they make because many promises are made in jest or without sufficient forethought. Thus, to be legally enforceable, a promise must be made in return for consideration, which consists of two general elements: bargained-for exchange and legal detriment.

A. Bargained-for Exchange

A performance or return promise is bargained-for if it is sought by the promisor in exchange for his promise, and it is given by the promisee in exchange for that promise. (Rest. 2d. § 71(2).) The bargain requirement serves the purpose of distinguishing between enforceable promises and ordinary gifts.

1. Gifts
A promise to make a gift is unenforceable, not only because it is not bargained-for but also because the offeree suffers no legal detriment. Example: A says to B, “I promise to buy you a new car.” A is not legally bound to buy B a car because A’s promise was not made as part of a bargain in exchange for some return benefit from B. There is no consideration for A’s promise.

2. Bargain v. Precondition
Performance of a bargain benefits the promisor and therefore is valid consideration. Performance of a precondition does not benefit the promisor and is not consideration. Example: X promises his sister a place to raise her family if she comes to visit him. She incurs the expense of moving, but X changes his mind. X is not legally bound to keep his promise, because no consideration was given for it. The moving expenses were incurred as a precondition to fulfilling his request. X did not bargain that he would give his sister a place to stay in exchange for her incurring moving expenses.

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