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Contracts: Consideration and Simple Donative Promises

We’re starting out with consideration. To constitute consideration, a performance or a return promise must be bargained for. Essentially, consideration is something of value that’s bargained for. In the early years of contract law, consideration was the reasons the contract is entered into by the parties. Over time, courts recognize really one type of consideration which is the bargain. There is a broader conception, however, that also includes concepts like reliance.

 

We’ve started our discussion on consideration by discussing simple donative promises. A simple donative promise is a promise made for affective reasons (love, friendship, and the like). In Dougherty v. Salt, an eight-year-old boy received a promissory note for $3,000 from his aunt that was payable at her death. When the testatrix of the aunt’s estate refused to honor the note, the boy sued. The New York Court of Appeals held that the note was the voluntary and unenforceable promise of an executory gift. The court said that there wasn’t consideration, which meant that the boy did nothing to get the note—he didn’t bargain for it. The note, therefore, wasn’t enforceable. Most gifts like this are a promise to make a gift. Actual gifts, those delivered to the recipient, are a legally valid and complete transaction so courts won’t allow the giver to take it back. A promise to make a gift, however, is usually unenforceable unless the promisee can show something like reliance, which we’ll talk about later.

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January 8, 2007 - Posted by | Contracts

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