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What Makes a Promise Legally Binding? Considering Consideration.

by Whitney O’Sullivan

What Makes a Promise Legally Binding? Considering Consideration.

You want to buy your 18 year old son a car. In return you ask that he promise you his undying love, respect, and gratitude. You want the ability to take back the car should he ever stop loving and respecting you. Can you and your son form a valid, enforceable contract with these terms? Short answer: no.

Contracts are formed when there is an offer by one party, acceptance of that offer by another, and valid consideration given by both.1 You likely understand what an offer and acceptance are (even if you don’t know all the legal caveats), but what is consideration? How do you know if you have it? How does this affect your ability to form a contract? Can a valid contract ever be formed without it?

Consideration is the word used to describe the requirement that both parties must agree to give up something of value in order to form a contract; you have to give to get.

Consideration is the word used to describe the requirement that both parties must agree to give up something of value in order to form a contract; you have to give to get. Consideration doesn’t have to be money or a tangible asset, but it must be objectively worth something. Consideration can manifest as giving away a right or interest possessed by a party; an agreement not to act, a detriment to, or a loss by the other.

The comparative value of each party’s consideration does not matter – the only requirement is that each party must offer something of some value. In other words, offering a stick of gum in exchange for a brand new house is valid consideration by both parties. (Note: Consideration cannot be an illegal item or impossible to perform.)

Now let’s look at the original example again. There is no question that you have offered valid consideration; the car has an objective value. But what about your son? Why, if your son is offering his undying love, respect, and gratitude, can you not form a contract? The reality is that while these feelings may hold value to you, that value is known only by you. It is a subjective value, and not value that anyone else can ascertain.

What if instead of offering his undying love, respect, and gratitude, your son offers to help you with yard-work once a month. Can you make a contract now? Yes, because there is an objective value which can be placed on your son performing this work. What about if your son gives up the right to take a job out of state? Again, yes; he is giving up the opportunity to take a job, and jobs have an objective value.

…there is one scenario under which a contract is formed without consideration; this is known as the “Doctrine of Promissory Estoppel.”

To complicate matters slightly, there is one scenario under which a contract is formed without consideration; this is known as the “Doctrine of Promissory Estoppel.” Promissory estoppel is the notion that if a person makes a promise, and another person justifiably acts to his/her detriment based upon this promise, that the promise should be enforced in the name of justice. For example, you promise to give your son a car. Based upon that promise your son acts reasonably and signs a lease for an expensive parking spot, quits his low paying job to become an Uber driver, and spends money on car accessories. If you then rescind your promise (or simply change your mind), there is likely an enforceable contract. You made a promise, it was reasonable that your son would act to his detriment (spend money, quit, etc.) based upon this promise, and justice can only be achieved by enforcing it.

None of this is to say you can’t still make your son’s day by giving him a car, but be confident in your decision before telling him, and just know that you can’t demand his love in exchange (no matter how much you deserve it)!

  1. Valid contracts may need to meet certain other requirements depending on where you are and what you are contracting for.