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This chapter include objectives: Define concept of consideration, list elements, and explain significance; explain why illusory promises, past consideration, and promises to perform preexisting obligations are not consideration; determine what is a valid contract modification. | Contracts Introduction to Contracts The Agreement: Offer The Agreement: Acceptance Consideration Reality of Consent 3 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Contracts Capacity to Contract Illegality Writing Rights of Third Parties Performance & Remedies 3 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Consideration P A E T R H C 12 “Make yourself necessary to someone.” Ralph Waldo Emerson, The Conduct of Life (1860) Learning Objectives Elements of consideration Legal value Bargained-for exchange Exchanges that fail to meet consideration Exceptions to consideration requirement 12 - Consideration is legal value bargained for and given in exchange for an act or a promise Consideration in the form of an act or promise may have legal value if the person Refrains from doing something the person has the legal right to do Does something the person had no prior legal duty to do . | Contracts Introduction to Contracts The Agreement: Offer The Agreement: Acceptance Consideration Reality of Consent 3 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Contracts Capacity to Contract Illegality Writing Rights of Third Parties Performance & Remedies 3 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Consideration P A E T R H C 12 “Make yourself necessary to someone.” Ralph Waldo Emerson, The Conduct of Life (1860) Learning Objectives Elements of consideration Legal value Bargained-for exchange Exchanges that fail to meet consideration Exceptions to consideration requirement 12 - Consideration is legal value bargained for and given in exchange for an act or a promise Consideration in the form of an act or promise may have legal value if the person Refrains from doing something the person has the legal right to do Does something the person had no prior legal duty to do Elements of Consideration 12 - Purely gratuitous promises are not enforceable because not supported by consideration Example: early case of Thorne v. Deas, in which part owner of sailing ship promised co-owners he would insure the ship for upcoming voyage. He failed to do so, and when the ship was lost at sea, court found he was not liable to co-owners for breaching his promise because his promise was purely gratuitous; he had neither asked for nor received anything in exchange for making it. Example of legal value: Hamer v. Sidway In famous 19th-century case, Hamer v. Sidway, an uncle’s promise to pay his nephew $5,000 if he refrained from using tobacco, drinking, swearing, and playing cards or billiards for money until his 21st birthday was held to be supported by consideration. Indeed, the nephew had refrained from doing any of these acts, even though he may have benefited from so refraining. He had a legal right to indulge in such activities, yet he had refrained from doing so at .
