What You'll Learn

  • The bargain test
  • Benefit and detriment
  • Adequacy and nominal value
  • Pre-existing duty and modification
  • Accord and satisfaction

Educational information only; not legal advice. This article is a general study aid and should be checked against current authority and course materials.

1. The Three-Part Consideration Analysis

1 Identify the promises or performances. What did each party commit to do or refrain from doing? 2 Find legal value. Did a party obtain something it had no legal right to receive, or give up freedom it previously possessed? 3 Show inducement. Was each promise or performance bargained for as the return for the other?

Key Takeaway

“Detriment” does not mean economic harm. Giving up a legal right, changing conduct, performing an act, or making a binding promise can be sufficient even if the promisee benefits from doing so.

2. Promise, Act, or Forbearance Can Supply the Exchange

Form of consideration Example

Promise A promises to paint; B promises to pay $4,000. Each promise induces the other.

Act A pays now in exchange for immediate delivery.

Forbearance A agrees not to pursue a colorable claim in exchange for payment.

Forbearance of a claim is strongest when the claimant holds a good-faith belief and an objectively reasonable basis for the claim. A knowingly false or frivolous claim does not create the same legal value.

3. Adequacy Is Usually Not the Test

Courts ordinarily do not weigh whether the values exchanged are equal. A non-quantifiable promise may be sufficient. But a merely nominal or sham exchange may reveal that the parties were disguising a gift. Extreme disparity can also support a separate defense such as unconscionability, duress, or undue influence.

Key Takeaway

“I will give you $500 if you walk across the room to receive it” may describe a condition on a gift rather than payment requested for the walk. Ask whether the requested action was the price of the promise or merely the way to receive generosity.

4. Pre-existing Duty Rule

At common law, promising to do only what one is already legally or contractually bound to do is ordinarily not new consideration for a modification. The rule protects the stability of existing bargains and discourages opportunistic demands after performance has begun.

● New or different performance: additional work can supply consideration. ● Unanticipated circumstances: the outlines recognize a fair, voluntary modification responding to circumstances not anticipated when the contract formed. ● Mutual rescission and new contract: both sides can surrender the old rights and form a replacement bargain. ● UCC §2-209: an agreed modification of a goods contract needs no new consideration, but it must be made in good faith.

Key Takeaway

The materials use Angel v. Murray for the principle that a fair and equitable modification may be enforced when unanticipated difficulties arise and the parties voluntarily agree.

5. Disputed Debt and Accord and Satisfaction

Paying less than a liquidated, undisputed debt is ordinarily not consideration for discharging the balance. A genuinely disputed or unliquidated claim can be settled through an accord - the new agreement - followed by satisfaction - performance of that agreement. Clear “payment in full” language and voluntary acceptance matter.

Key Takeaway

A builder is already obligated to install ten doors for $20,000. Midway through, the builder demands $4,000 more for the same work. Without a new duty or unanticipated circumstance, the promise to pay extra lacks new consideration at common law. If this were a good-faith modification of a goods contract, §2-209 would change the analysis.

Common Mistake

Do not confuse consideration with performance. A contract can have consideration even if a party later breaches. Do not measure adequacy when the issue is whether an exchange existed. And always separate common-law modification from UCC modification.

Primary Authorities

  • ● Restatement (Second) of Contracts: bargained-for exchange and legal detriment principles.

  • ● U.C.C. § 2-209 (modification without new consideration, subject to good faith).

  • ● Angel v. Murray (unanticipated circumstances and fair modification).

Exam-ready conclusion

Consideration requires a legally sufficient, bargained-for exchange. Identify what each side gave, why it was given, and whether the promise imposed a real commitment beyond an existing duty.