The rule
Consideration requires an actual requested exchange, which can include surrender of legal freedom without financial benefit to the promisor. Unequal value does not by itself negate a proved exchange. A gift recital or an apparent promise leaving complete discretion requires examination of the actual obligations.
Elements
- An actual exchange sought by the promisor.
- Requested performance, forbearance or a genuine return obligation.
Exceptions and limits
- A recital can be rebutted by evidence of a gift.
- Wood's inference about effort depended on the particular grant of exclusivity and the agreement's surrounding obligations.
When the issue arises
A gift note, a requested forbearance, a very unequal exchange or an agreement with no express effort clause puts the content of the supposed exchange in issue.
The same act can have a different legal role
In Hamer, the uncle requested forbearance as the price of his promise. The nephew gave up legal freedom in response, so no separate financial gain to the uncle was necessary. The benefit of abstaining to the nephew did not erase that surrender.
Dougherty involved a note intended as a gift. The plaintiff's own account rebutted its printed recital of consideration. Check what each party asked for and undertook; a form's recital is evidence to test against the transaction.
Unequal value does not erase a proved exchange
Batsakis enforced the promised dollar obligation for drachmae advanced, despite the disparity alleged in their value. The borrower received the very performance for which she had agreed to sign.
The opinion addressed the consideration defenses before it. It did not decide every possible fraud, duress or unconscionability challenge; do not turn its adequacy holding into immunity for every oppressive transaction.
An implied promise needs a basis in the agreement
Wood inferred reasonable efforts from the exclusive arrangement, shared revenues and related obligations. Without efforts, the promised share of proceeds would have no practical value to the designer. Those concrete features supported an obligation despite missing express words.
That does not authorize supplying a promise whenever enforcement seems attractive. Identify the exclusivity or other language doing the work, and distinguish an actual commitment from complete discretion to do nothing.
A simple fact pattern
Facts. A collector promises a neighbor $500 if the neighbor refrains for a month from exercising an undisputed right to use a shared garden. The neighbor agrees and stays out for that month, as requested.
Analysis. The collector sought the forbearance in exchange, and the neighbor surrendered an existing legal right. Under Hamer's reasoning, the absence of a financial loss or benefit to the collector does not defeat consideration.
A harder fact pattern
Facts. A donor makes an unsolicited $3,000 birthday promise without asking for any act in return. Expecting that payment, the recipient buys a bicycle. Later the donor offers the same payment for a promise to repair a garden bench, work the recipient did not already owe.
Analysis. Separate the two undertakings. The unrequested bicycle purchase does not supply an exchange for the original gift. The later repair promise can furnish a price for the new payment commitment, but an answer must establish that later agreement rather than rewrite the history of the gift.
Any reliance claim on the earlier assurance still requires causation, expected reliance and injustice. The purchase does not automatically establish every condition for that distinct theory or its remedy.
Leading cases
Hamer v. Sidway
Giving up a legal right at someone's request is consideration, even if the person who asked gets no economic benefit from it.
1919Dougherty v. Salt
A written promise that recites 'value received' is not enforceable if the truth is that it was a gift. The recital does not create consideration.
1917Wood v. Lucy, Lady Duff-Gordon
A court can imply a duty of reasonable efforts into an exclusive dealing contract, so the promise is not illusory.
Compared with nearby doctrines
| Doctrine | How it differs |
|---|---|
| Bargained-for exchange | Identify which act the promisor sought as the price of the undertaking, then distinguish it from a later act the recipient chose independently. |
| Past consideration | Earlier service does not become a later exchange merely because the promisor appreciates it. |
| Promissory estoppel | Reliance is a separate basis to test when the claimed exchange fails. |
Common exam mistakes
- Calling every inconvenience consideration without showing it was requested in exchange.
- Treating a recital as conclusive after the evidence shows a gift.
- Using unequal value alone to deny a proved bargain.
- Inferring a reasonable-efforts duty without connecting it to the agreement's terms.
Practice questions
An aunt signs a note reciting value received. The parties agree she intended a gift and requested no act or promise in exchange. Which is the best consideration analysis?
Answer and explanations
Correct answer: D.
Authority: Dougherty: gift and rebutted recital
- A. Wrong. Dougherty treats the recital as rebuttable rather than a substitute for an actual exchange.
- B. Wrong. The problem is absence of an exchange, not the amount promised.
- C. Wrong. A desired gift is not a requested performance or return promise.
- D. Correct. The admitted gift facts supply no bargain, even though the form recites value. Any separate reliance claim requires additional analysis.
More contracts practice questions and essays
Quick answers
Can beneficial conduct still be legal detriment?
Yes. Hamer treats requested surrender of legal freedom as consideration even if abstention also benefits the person who undertakes it.
Does value received printed on a note settle the issue?
No. Dougherty permitted the actual gift evidence to rebut the recital. The transaction must supply the exchange the form asserts.
Does Wood imply effort into every indefinite agreement?
No. Its inference came from the exclusive commercial arrangement and its obligations. An answer needs comparable support in the actual terms.