Also known as: absent consideration · lack of consideration
Written by attorneys — see sources below.
A failure of the bargained-for exchange or legal detriment required for contract formation. One party's promise supplies no consideration when it imposes no new legal obligation or when the other party already owes the same performance under a preexisting duty.
Andre Antoine chartered a vessel from Ariana Azizi to deliver cargo for a fixed price. After departure Azizi demanded an extra $200,000 citing rough seas and took a slightly longer route. Antoine refused payment. The court held Azizi's performance of the original duty supplied no consideration for the added promise.
Ashford Manufacturing sent Apex Dynamics a signed record offering to sell specialized parts and assuring the price would remain open for sixty days. Apex ordered the parts within that period. Ashford attempted to revoke citing absence of consideration for the assurance. The statute prevented revocation for lack of consideration.
Apollo Energy submitted a paving subcontract bid to Artemis Logistics. Artemis used the bid in its own successful proposal to the owner. Apollo later discovered an error and tried to revoke. Artemis accepted the bid after award. The court enforced the offer under promissory estoppel even though no consideration supported an option contract.
On July 28, 1955, plaintiff, a licensed general contractor, was preparing a bid on the Monte Vista School Job in the Lancaster school district with bids due before 8 p.m. It was customary in that area for general contractors to receive the bids of subcontractors by telephone on the day set for bidding and to rely on them in computing their own bids. Plaintiff's secretary received between 50 and 75 subcontractors’ bids by telephone that day and recorded them on special forms for plaintiff to post on a master cost sheet. Late in the afternoon, defendant's estimator telephoned and submitted a bid of $7,131.60 for the paving work according to the plans and specifications. Plaintiff listened to the bid over an extension telephone and posted it on the master sheet, where it was the lowest bid for the paving. Plaintiff computed his own bid of $317,385 accordingly, submitted it naming defendant as the subcontractor for the paving, and was awarded the contract when his bid proved the lowest. The next morning, plaintiff stopped at defendant's office and was told by defendant's construction engineer that they had made a mistake in their bid and could not do the work for the price bid. Plaintiff informed the engineer that he expected defendant to carry through with the original bid since he had used it in compiling his bid. Defendant subsequently refused to perform the paving work for less than $15,000. Plaintiff obtained figures from other subcontractors. After several months, he engaged L & H Paving Company to do the work for $10,948.60. The trial court found that defendant made a definite offer to do the paving for $7,131.60 and that plaintiff relied on the bid in computing his own bid and naming defendant as the subcontractor. It entered judgment for plaintiff in the amount of $3,817, the difference between defendant's bid and the cost of the paving to plaintiff, and defendant appealed from that judgment.
View casePerformance of a preexisting duty supplies no consideration when the promisor undertakes no new legal obligation beyond what the original contract already required. A modification therefore fails for absence of consideration if the performing party merely continues the same duty under changed circumstances.
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A signed firm offer by a merchant is irrevocable for the stated time or a reasonable time up to three months even without consideration. The statute expressly removes the common-law requirement of consideration for such assurances in signed records.
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Reasonable and foreseeable reliance by the offeree can make an offer irrevocable even though no consideration supports an option contract. The offeror becomes bound to keep the offer open to the extent necessary to avoid injustice from the induced change of position.
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…position affords a compelling basis also for implying a subsidiary promise not to revoke an offer for a bilateral contract. The absence of consideration is not fatal to the enforcement of such a promise. It is true that in the case of unilateral contracts the Restatement finds consideration for the implied subsidiary promise in the part…