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Consideration in the Law of Contract


In the epoch of Capitalism, the law of contract is widely used in political, social, and economic aspects of life. The purpose of contracts is to establish legal relations between the parties involved in the process. Consequently, their actions are supposed to be aligned to the conditions and duties pointed out. Pivoting from obligations is common, especially if the wording of contracts is vague and ambiguous or lacks details. The solution to this problem is the usage of promises that are affirmed by consideration because, apart from some exceptions, only they are completely enforceable.

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The Evidence of Consideration’s Efficiency

In the law of contract, the only enforceable promises are those that are supported by consideration except for several cases. To this, first, the exact definitions of a contract, contract law, and consideration should be designated. Second, the way consideration influences the performance of obligations is to be labeled. Third, the exceptions are to be defined and enumerated.

Contract and Contract Law

A contract is legally defined as a promise or a set of promises that must be performed following the agreement protected by law. According to Passarelli (2019), the agreement is to include specific terms between parties with circumstances and complexities taken into consideration. Then, a contract requires a mutually accepted offer, a promise to perform with the time or event, including terms and conditions for this performance. Contract law is a law that systematizes and legalizes agreements between physical people or companies. In case an agreement is not fulfilled, the breach of contract is noted, and the case can be taken to court.


Consideration can be defined as a legally required element of a contract, included to let the parties involved disclaim some legally marked promises for some valuable actions or resources in return. These actions and sources must be marked as a legal detriment, which is always a legal benefit to one of the parties. Passarelli (2019) claims that consideration consists of two key elements, the first is whether the promisee has incurred a legal detriment, and the second element is whether the legal detriment was bargained for. Importantly, consideration should have legal sufficiency which means that the exchange of a legal detriment and a legal benefit is present in the contract.

There are three kinds of consideration: executory, executed, and past consideration. Executory consideration means that some kind of a promise is given for another promise. For example, two companies have agreed on a cross-marketing collaboration with one of the companies advertising the other online and the other presenting the first at a conference. Nobody has already done anything, but the cooperation and its conditions have been discussed.

Executed consideration means a performance of an act in return for a promise. For example, a person has lost an important document and now offers a reward for its return. Another person has found the loss and now is returning it to the owner. According to Ayres and Klass (2017), this is the exact point when the promise has become binding. Meanwhile, the latest is not obliged to pay anything because the act has not been legally described. Past consideration is not a promise to bind because the promisor gives a moral obligation without getting anything in exchange, as he or she has it before the promise is made.

Considerations’ Effects on Contracts

Consideration enforces promises because, to make a contract valid, the obligation must be mutual. The consideration set as the core of this mutuality, for example, a rental contract may include a promise of the landlord to return the pawn to the renter when he or she leaves the accommodation. The full pawn is to be returned if this accommodation stays in the same condition it has been before the renter moved in. Meanwhile, there is a consideration included with a list of assets the landlord is especially worried about. Each of them with its price that will be charged from the renter’s pawn in case he or she damages it. Consequently, both parties are mutually obliged, and, with promises made legally binding, the contract is valid.

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Promises Binding Without Consideration

Though in contract law binding promises are those that are supported by consideration, there are some exceptions enforceable by the court. For example, promissory estoppel prevents the promisor from claiming that there the contract had no consideration. This is the legal principle, according to which a promise is enforceable by law if the action or forbearance is taken, and the only way to avoid injustice is to enforce it. This type includes promises to pay for the benefits received or the past debt. Another example of promises binding without consideration, as mentioned by Passarelli (2019), involves modifications to contracts for the sale of goods. According to the statement, the Uniform Commercial Code allows modification of written contracts, as long as this modification is for the good faith


The usage of consideration is the main way of enforcing promises in the law of contract because it enforces the two parties to be mutually obliged with the conditions of the agreement claimed. Then, consideration is the key way to make promises binding, except for the past consideration. Meanwhile, some promises are mandatory without consideration with promissory estoppel or modifications applied.


Ayres, I., & Klass, G. (2017). Studies in contract law (9th ed.). Foundation Press.

Passarelli, G. (2019). Contract law in contemporary international commerce: Considerations on the complex relationship between legal process and market process in the new era of globalisation. Nomos Verlag.

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