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Consideration

CONSIDERATION

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Consideration is an essential element for the formation of a contract. It may consist of a promise to perform a desired act or a promise to refrain from doing an act that one is legally entitled to do. In a bilateral contract—an agreement by which both parties exchange mutual promises—each promise is regarded as sufficient consideration for the other. In a unilateral contract, an agreement by which one party makes a promise in exchange for the other's performance, the performance is consideration for the promise, while the promise is consideration for the performance.

Consideration must have a value that can be objectively determined. A promise, for example, to make a gift or a promise of love or affection is not enforceable because of the subjective nature of the promise.

Traditionally, courts have distinguished between unilateral and bilateral contracts by determining whether one or both parties provided consideration and at what point they provided the consideration. Bilateral contracts were said to bind both parties the minute the parties exchanged promises, as each promise was deemed sufficient consideration in itself. Unilateral contracts were said to bind only the promisor and did not bind the promisee unless the promisee accepted by performing the obligations specified in the promisor's offer. Until the promisee performed, he or she had provided no consideration under the law.

For example, if someone offered to drive you to work on Mondays and Tuesdays in exchange for your promise to return the favor on Wednesdays and Thursdays, a bilateral contract would be formed binding both of you once you provided consideration by accepting those terms. But if that same person offered to pay you $10 each day you drove him to work, a unilateral contract would be formed, binding only upon the promisor until you provided consideration by driving him to work on a particular day.

Modern courts have de-emphasized the distinction between unilateral and bilateral contracts. These courts have found that an offer may be accepted either by a promise to perform or by actual performance. An increasing number of courts have concluded that the traditional distinction between unilateral and bilateral contracts fails to significantly advance legal analysis in a growing number of cases where performance is provided over an extended period of time.

Suppose you promise to pay someone $500.00 to paint your house. The promise sounds like an offer to enter a unilateral contract that binds only you until the promisee accepts by painting your house. But what constitutes lawful performance under these circumstances? The act of beginning to paint your house or completely finishing the job to your satisfaction?

Most courts would rule that the act of beginning performance under these circumstances converts a unilateral contract into a bilateral contract, requiring both parties to fulfill the obligations contemplated by the contract. However, other courts would analyze the facts of each case so as not to frustrate the reasonable expectations of the parties. In neither of these cases are the legal rights of the parties ultimately determined by courts by applying the concepts of unilateral and bilateral contracts.

In still other jurisdictions, courts have simply expressed a preference for interpreting contracts as creating bilateral obligations in all cases where no clear evidence suggests that a unilateral contract was intended. The rule has been stated that in case of doubt an offer will be presumed to invite the formation of a bilateral contract by a promise to perform what the offer requests, rather than the formation of a unilateral contract commencing at the time of actual performance. The bottom line across most jurisdictions is that as courts have been confronted by a growing variety of fact patterns involving complicated contract disputes, courts have turned away from rigidly applying the concepts of unilateral and bilateral contracts and moved towards a more ad hoc approach.

cross-references

Contracts; Performance; Promise.

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"Consideration." West's Encyclopedia of American Law. . Encyclopedia.com. 18 Aug. 2017 <http://www.encyclopedia.com>.

"Consideration." West's Encyclopedia of American Law. . Encyclopedia.com. (August 18, 2017). http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/consideration

"Consideration." West's Encyclopedia of American Law. . Retrieved August 18, 2017 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/consideration

consideration

con·sid·er·a·tion / kənˌsidəˈrāshən/ • n. 1. careful thought, typically over a period of time. ∎  a fact or a motive taken into account in deciding or judging something: the idea was motivated by political considerations. ∎  thoughtfulness and sensitivity toward others: companies should show more consideration for their employees. 2. a payment or reward: you can buy the books for a small consideration. ∎  Law (in a contractual agreement) anything given or promised or forborne by one party in exchange for the promise or undertaking of another. 3. archaic importance; consequence. PHRASES: in consideration of on account of: a nightlight burned in consideration of Ernie's phobia. ∎  in return for: he paid them in consideration of their services. take into consideration take into account. under consideration being thought about.

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"consideration." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. 18 Aug. 2017 <http://www.encyclopedia.com>.

"consideration." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. (August 18, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/consideration

"consideration." The Oxford Pocket Dictionary of Current English. . Retrieved August 18, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/consideration

consideration

consideration, in law: see contract.

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"consideration." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. 18 Aug. 2017 <http://www.encyclopedia.com>.

"consideration." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. (August 18, 2017). http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/consideration

"consideration." The Columbia Encyclopedia, 6th ed.. . Retrieved August 18, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/consideration