Insufficient consideration

Question 1

Illusory consideration

Answer 1

• if promisor retains unfettered discretion regarding performance of the promise→ not bound to perform it
• not good consideration

Question 2

Past consideration

Answer 2

• an act, counter-promise or forbearance that occurs before promisor gives their promise or independently from their promise or transaction
  —> something can’t constitute consideration if it clearly occurred before the promise, unless consideration and promise are substantially part of the same transaction

Question 3

general rule of insufficient consideration

Answer 3

general rule= past consideration is no consideration
—> to constitute consideration what is stipulated by promisor must come into existence concurrently with making of promise

Question 4

Executed consideration vs past consideration

Answer 4

• consideration in form of performance of an act that is part of the same transaction as the promise
  —> in unilateral contract promisee provides executed consideration when they perform act stipulated by promisor
  e.g. A promises $100 for anyone who finds his lost dog so if B then finds lost dog, B thereby provides executed consideration for A’s promise to pay the reward→ promise can be enforced

IN CONTRAST

—> for past consideration promise is made independently of concluded transaction
e.g. B happens to find lost dog and then A offers to pay reward to B, B’s return of dog is past consideration & therefore not good consideration for A’s promise of reward→ promise can’t be enforced

Question 5

Executory consideration

Answer 5

• a promise that is yet to be performed BUT still good consideration
  e.g. if A and B agree that B will buy A’s car for $1000, both A’s promise to give B washing machine and B’s promise to buy it constitute executory consideration for one another’s promise

Question 6

exceptions to rule that past consideration is not good consideration

Answer 6

—> a debt incurred by a minor may be good consideration for that person’s promise to repay it after they turn 18
—> a service performed in the past may be good consideration for a subsequent promise to pay for it, if it was performed at the promisor’s request and it was understood that it was to be paid for (because performance of the service and the promise to pay for it are treated as part of the same transaction)