Offer / Acceptance / Consideration - The best way to understand the doctrine of consideration is to start with its foundation - the bargain theory of consideration. Remember that the formation of a contract starts with an offer, followed by an acceptance and joined by consideration. An essential element (but not the totality; ah, the devil and his details) of an offer is a promise by the offeror. The doctrine of consideration is concerned with whether that promise is enforceable.

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Assume two parties, a promisor who extends a promise and a promisee to whom the promise is extended. Is there consideration described in these facts? No. According to the bargain theory of consideration, there is consideration only if there was a “bargained for” exchange, i.e., an exchange whereby the promisor gave his or her promise to the promisee in order to get a promise or performance in return, and the promise gave the sought-after promise or performance in exchange.

Reciprocal Coordination - One key idea is that the parties reciprocally coordinated for their mutual benefit. Thus, if I promise to pay you $600 without receiving your promise or performance in return, there has been no reciprocal coordination.

Is it always the case that a bargained-for, two-way exchange will provide the consideration needed to bind an offer and an acceptance? No. Sometimes the bargained-for, two-way exchange involves matters that are too personal for a court to involve itself with.

Personal and Private Two-Way Exchanges - Let’s say I invite you to lunch and promise to pay you $500 if you show up, and you do show up, but I refuse to pay you. If you sue to recover the $500, will the court enforce my promise? Probably not. For reasons of public policy, some bargained-for, two-way exchanges (whether promise-for-promise or promise-for-performance) are too private and personal, i.e., they are too remote from a commercial exchange, for a court to involve itself.

Conclusion - Remember this: according to the Restatement (Second) Contracts, the foundation of consideration is the bargain theory, the essence of which is this: a promise or performance is “bargained for” if: (a) the promisor gives his or her promise in order to get the promisee’s promise or performance in return, and (b) the promisee gives the promise or performance in exchange for the promisee’s promise.

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