Free tool · Contract Law
What Counts as Consideration?
Consideration is what each party gives or promises in exchange for the other’s promise. It makes a promise a bargain, and a promise without it is usually not enforceable. To count, it must be something of legal value that the party was not already bound to give, and it must be sought in exchange for the promise. A gift, something done before the promise, or a promise that leaves a party free to do as they like does not count. Answer the questions below to see whether a promise is supported, and what might rescue it if not.
Tool · Consideration Tester
Consideration is present: this looks like a bargain.
The promisee gives something of legal value: satisfied. The promisee gives, or promises, something they were not already bound to give: an act, a forbearance, or a promise. It can be small.
It was sought in exchange (bargained for): satisfied. The promisor’s promise induced the promisee’s act or promise, and the promisee’s act or promise induced the promisor’s. Each was the price of the other.
The promisor’s own promise is real: satisfied. The promisor is really bound.
The exchange is not a sham: satisfied. The exchange is roughly equal, but that would not matter.
Consideration is what makes a promise a bargain. The tester asks the short list of questions that the doctrine asks, says which one fails if the answer is no, and shows what might still rescue the promise (promissory estoppel, restitution and a few narrow exceptions). It uses simplified general American rules, which differ between states and between countries, and it is not legal advice. Runs in your browser; nothing is stored or sent.
How to use it
- Say what the other party gives or promises, and whether it was sought in exchange.
- Say whether the promisor’s own promise is real, and whether the exchange is a sham.
- Say whether this is a change to an existing contract, and whether the other party relied on the promise.
- Read which test fails, and what other routes might still help.
Common questions
Does consideration have to be equal in value?
No. Courts do not weigh the adequacy of consideration: a bad bargain is still a bargain. A gross imbalance may point to fraud, duress or unconscionability, but not to a failure of consideration.
What is past consideration?
Something done before the promise was made. Because it was not given in exchange for the promise, it is not consideration, with narrow exceptions in some states, such as a promise to pay for a material benefit received.
What if there is no consideration but someone relied on the promise?
Promissory estoppel may apply: a clear promise, reasonable and foreseeable reliance, and injustice unless the promise is enforced. Remedies may be limited to the reliance loss.
Learn the law behind the tool
This tool is part of our Contract Law course, with lectures, concept maps, flashcards, interactive exercises and a capstone case. Contract Law, Module 1: Contract Formation.
More free law tools
General information, simplified, mainly on American law, not legal advice. States and countries differ, and real cases turn on facts that a tool cannot capture.