Past consideration

Definition

Past consideration refers to a situation where a promise is made based on a previous action or event that has already occurred, rather than something that is to be done in the future. This concept is crucial in understanding the requirements for valid consideration in contracts, as it clarifies that something given or performed before the promise cannot serve as valid consideration for a new contract.

5 Must Know Facts For Your Next Test

1. Past consideration cannot support a new contract because it lacks the element of current exchange; it has already been completed.
2. The rule against past consideration helps prevent unjust enrichment, ensuring that one party does not benefit from a promise made based on prior actions without giving something in return.
3. To be considered valid, a promise must be supported by present or future consideration, which creates a mutual exchange between the parties involved.
4. In some jurisdictions, past consideration might be recognized under certain exceptions, such as when the past action was performed at the request of the promisor.
5. Understanding past consideration is essential for analyzing enforceability issues related to agreements and ensuring all necessary elements of a valid contract are present.

Review Questions

• How does past consideration differ from valid consideration in a contractual agreement?
  • Past consideration differs from valid consideration because it refers to actions or benefits that have already occurred prior to the promise being made. Valid consideration requires an exchange of value that occurs simultaneously with or after a promise, creating a mutual obligation between parties. In contrast, past consideration fails to create this mutuality and thus does not support new contractual agreements.
• Discuss the implications of past consideration on the enforceability of contracts and how it can lead to disputes between parties.
  • The implications of past consideration on contract enforceability are significant, as agreements based solely on past actions may not be legally binding. This can lead to disputes if one party believes they have a claim based on prior performance, while the other party argues that there was no current consideration. Understanding this distinction is crucial in contract law to avoid misunderstandings and ensure that all parties are aware of their obligations.
• Evaluate the legal reasoning behind why past consideration is not considered sufficient for enforcing a promise and its relevance in modern contract law.
  • The legal reasoning behind disallowing past consideration as sufficient for enforcing a promise rests on the principle of reciprocity; for a contract to be valid, both parties must provide something of value at the time of the agreement. This principle ensures fairness and discourages opportunistic behavior where one party might seek to benefit from actions taken before any agreement was made. In modern contract law, this understanding helps maintain clear standards for what constitutes enforceable agreements and protects parties from claims based on unreciprocated benefits.

Related terms

consideration: Consideration is the legal concept that refers to something of value exchanged between parties in a contract, which is necessary for the contract to be enforceable.

bilateral contract: A bilateral contract is an agreement in which both parties make promises to each other, each party's promise serving as consideration for the other’s.

executed contract: An executed contract is one in which all parties have fulfilled their obligations, meaning that the terms of the contract have been fully performed.