Four Kinds of Agreements That Lack Consideration
In contract law, consideration refers to the exchange of something of value, such as money, goods, or services, between parties to a contract. Without consideration, a contract may not be legally enforceable. However, there are some types of agreements that lack consideration altogether, making them invalid from the outset. Here are four of them:
1. Gratuitous promises – A gratuitous promise is one where one party promises to do something for another without receiving anything in return. For example, if you promise to give your friend a gift without receiving anything in exchange, the promise lacks consideration. Such promises are not legally binding.
2. Pre-existing duties – Contracts require parties to exchange something of value. If one party is already under a pre-existing duty to perform a task or service, they cannot offer it as consideration for a new contract. This is because they already have a legal obligation to perform the task or service.
3. Illusory promises – An illusory promise is one that appears to be binding, but in reality, it does not require the promisor to do anything. For example, if you promise to buy your neighbor`s car if you feel like it, the promise lacks consideration because it does not require you to do anything specific.
4. Past consideration – Consideration must be exchanged at the time the contract is formed. Promises made in exchange for something that has already been given or done lack consideration. For instance, if you promise to pay your friend for a favor they did for you last week, the promise lacks consideration because the favor was already completed.
In conclusion, contracts require consideration to be legally binding. The absence of consideration makes them invalid. As a professional, it is important to be familiar with the legal concepts surrounding contracts and agreements to ensure that your content is clear and accurate.