Special Issues with Consideration

• Author: Franklin G. Snyder, Mark Edwin Burge
• Pages: 135-154

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UNIT 8: SPECIAL ISSUES WITH CONSIDERATION 135

Unit 8

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CONSIDERATION

Part Two

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Special Issues with Consideration

FOCUS OF THIS UNIT

Some promises are relatively trivial, such as promising to pay back a dollar

you borrowed to get a can of soda. Some promises are extraordinarily solemn and

important, like a promise to deliver the last letter home for a dying soldier. But

enforceability, as we have seen, does not depend on the importance of the promise,

but on whether it is supported by consideration—whether there is, in the language of

the Restatement (Second) of Contracts, a “bargained-for exchange.”

Modifications? Recall the preexisting duty rule from the last unit. We talked

about duties arising under law, but duties can also arise under contracts. Suppose

you have a contract to paint your neighbor’s house $5,000, but you now refuse to do

so unless the neighbor promises to pay an extra $500. As you have a contractual

obligation to paint the house $5,000, there is no consideration for the extra $500. As

you will see from the following materials, however, it may not be quite that simple.

Benefits Already Received? The preexisting duty rule, as we saw, was based

on the idea that you can’t bargain for something you’re already entitled to. But what

about bargaining for something you’ve already received? You might think that after

the cases in the previous unit, the answer would be easy—if you’ve already received

something, you are almost by definition not bargaining to get it. An important and

oft-cited English case, Hunt v. Bate, 73 Eng. Rep. 605 (C.P. 1568), made it clear that

a subsequent promise to pay for something already received was not enforceable as a

contract. A gift followed by a return gift does not make a “bargained -for exchange.”

Yet the doctrine was never quite that clear. In a series of cases, nearly all involving

debtors who had promised to repay loans after the loans had been discharged in

bankruptcy or barred by the statute of limitations,

1

courts held that if the prior

1

[You are probably familiar with this concept, but statutes of limitations are rules that require

lawsuits to be brought withi n a particular period of time . Thus, in a particular state a contract claim

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136 CHAPTER III: CONSIDERATION

benefit was money received, the subsequent promise was enforceable without new

consideration. The reasoning generally was that a debtor was always morally

obligated to pay back the money, even if the debt was unenforceable, and so that debt

acted as consideration.

Moral Obligation? But there obviously are “moral” obligations beyond just

repaying debts. In Style v. Smith,

2

another sixteenth century case decided only a few

years after Hunt v. Bate, the court raised a hypothetical:

If a physician, who is my friend, hearing that my son is sick, goeth to

him in my absence and helps and recovers him, and I being informed

thereof promise him in consideration . . . to give him £20 an action will

lie for the money.

In other words, said the court, the father must pay even though the promise came

after service was performed. But many cases went the other way, including the

influential Eastwood v. Kenyon, 11 Ad & E 438; 113 ER 482 (Q.B. 1840). Professor

Brian Simpson concluded the English rules relating to moral consideration were

“easier to state than to explain.” As you can see from the following cases, these

English rules—in all their confusion—were imported largely intact into American

law.

As you work through the problems and the readings, try to articulate whether

liability is based on the idea of the promise or the idea of some kind of exchange.

Consider sections 86 and 89 of the Restatement (Second) of Contracts in connection

with the materials that follow.

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might have to be brought within four years of the breach; if you wait longer than that to file suit, the

claim is barred.—Eds.]

2

[There is no citation and no formal report of Style v. Smith still in existence, although the

language was referred to and relied upon in later decisions. The quote here is taken from A. W. BRIAN

SIMPSON, A HISTORY OF THE LAW OF CONTRACT: THE RISE OF ASSUMPSIT 456 (1975). – Eds.]