Select Page

University of Kansas School of Law
Drahozal, Christopher R.

Contracts I Outline

Basis for Enforcing Promises

Consideration as a Basis for Enforcement

1. Fundamentals of consideration
a.Consideration: 1. something of value (such as an act, forbearance, or a return promise) received by a promisor from a promise; 2. consideration, or a substitute such as promissory estoppels, is necessary for an agreement to be enforceable
b. Three Interests to be protected
1. Expectation interest – put promisee in same position had the promise been performed
2. Reliance interest – put promisee in same position they would have been in had the promise not been made
3. Restitution interest – putting the promisor back in the position they would be in had the promise not been made
2. Breach of Contract claim – must have consideration
a.Consideration is a bargained for exchange
1. Restatement (Second) 71(1): Bargain Theory
a. To constitute consideration, a performance or a return promise must be bargained for
2. Restatement (Second) 71(2): Bargain Theory
a. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and given by the promisee in exchange for that promise.
b. Can seek performance or return promise
1. Ex. Hamer v. Sidway(p. 27) – (uncle promised to give nephew money for not drinking or smoking) – when the promisee forbears or gives up rights in reliance on promisor’s promise there is sufficient consideration to enforce promise
c. Maybe no consideration if not a lawful right to act (Hamer)
d. Compare benefit/detriment approach – Relevant as ancient history
1. Restatement (Second) 79 – If the requirement of consideration is met, there is not additional requirement of
a. A gain, advantage, or benefit to the promisor or a loss, disadvantage or detriment to the promisee.
3. Implications of the Bargain Theory
a. Gratuitous promises – promises to make a gift, unenforceable
b. Peppercorns – sham promises are not consideration
1. Ex. Giving a penny in return for a promise
c. Promises to settle lawsuits can be consideration but in addition to bargained for exchange need reasonable and good faith belief in claim
1. Ex. Fiege v. Boehm(p. 34) – sufficient consideration for a promise to forbear from bringing lawsuit in exchange for the payment of child support even if it is later dis

Ex. Williston v. Tramp – If you go around the corner I will give you a coat
a. Going around corner not consideration it is a condition of a promise
b. But if he promises to give tramp a coat to move from outside Williston’s store and move to corner in exchange for a coat probably consideration
3. Ex. Tiffany’s problem
a. If you will meet me at Tiffany’s next Monday at noon I will buy you the emerald right advertised in this weeks New Yorker.
b. Consideration because daughter had not seen father for many years and he was trying to induce her to see him
4. Ex. Central Adjustment Bureau (52)– non competition clause still enforceable even after beginning employment as continued employment is sufficient consideration
g.Illusory promises are not consideration
1. Traditional approach: literal reading of promise
a. Take promise literally
b. If promise has no substance (i.e. is peppercorn), cannot be consideration