Consideration

Consideration is the bargained-for exchange that supports a contract, something of value (a promise, act, forbearance, or property) given by each party in exchange for the other's promise. Texas requires consideration for contract formation; "naked promises" without consideration are generally unenforceable.

Elements

(1) A bargained-for exchange, each party gives something to receive something; (2) Legal value, the consideration must have legal sufficiency, though the amount need not be equivalent. Past consideration (something already given before the promise) is generally insufficient.

Pre-existing duty rule

A promise to do something one is already legally obligated to do is generally not consideration. Modifications of existing contracts traditionally require new consideration, though Texas, like the UCC, recognizes exceptions.

UCC modification exception (§ 2.209)

For sales of goods contracts, modifications need not be supported by consideration to be binding (subject to good-faith and reasonable-commercial-standards limitations). This is a deliberate UCC departure from common-law contract modification rules.

Promissory estoppel (substitute for consideration)

Where a promisee reasonably relies on a promise to the promisee's detriment, Texas courts may enforce the promise despite absence of formal consideration. Required elements: (1) a promise; (2) foreseeable reliance by the promisee; (3) substantial reliance to the promisee's detriment; (4) injustice avoidable only by enforcement.

Companion article: Contract Disputes in Texas