Which of the following is not considered valid consideration for a contract?

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BlackTom AI · Accepted Answer

We start by restating the question to ensure clarity: Which of the following is not considered valid consideration for a contract?

Option A: The use of a venue to host a concert in exchange for a leasing fee.
- This involves a mutual exchange of value: the venue use (promise/performance) in return for a leasing fee (consideration). It is a classic example of bargained-for consideration and would generally be regarded as valid.

Option B: A salary paid to a coach for a year coaching a team.
- A salary paid in exchange for the coach’s services constitutes consideration. The coach’s promise to perform coaching duties and the employer’s promise to pay salary are two-sided and support a contract, making this valid consideration.

Option C: A bonus for a coach for winning 6 games.
- A performance-based bonus ties additional compensation to specific performance. This is a typical form of consideration where the coach’s performance is the bargained-for exchange, thereby valid consideration.

Option D: A promise to donate $50,000 to a University to help build a stadium.
- This is typically a gift. In contract terms, a promise to donate without any quid pro quo in return is not consideration for another promise because there is no bargained-for exchange. Unless the donor receives something in return (which would then be part of a separate contract), the donation promise on its own does not constitute valid consideration for a contract.

Option E: All of the above are consideration.
- This option asserts that every listed item constitutes valid consideration. Given the analysis above, at least one item (the donation promise in D) does not fit the standard definition of consideration, so this option would be inaccurate if taken as a blanket statement.

In evaluating these choices, it’s important to recall the core concept of consideration: something of value is bargained for and given in exchange for a promise or performance. Items that involve gifts or gratuitous promises typically lack that exchange unless there is an accompanying agreement that creates a mutual benefit or detriment. Conversely, venue use for a fee, a salary for services, and performance-based bonuses all reflect reciprocal obligations that satisfy the idea of consideration.

Put differently, the presence or absence of reciprocity and bargained-for exchange distinguishes valid consideration from a gratuitous promise. A venue lease, salary for services, and a performance bonus all illustrate reciprocal arrangements, whereas a plain donation promise alone illustrates a grant without a corresponding obligation on the part of the recipient to provide a return consideration. The final determination hinges on whether the donation promise is part of a broader exchange that creates consideration; if not, it is not valid consideration in the conventional contract law sense.

SMGT 3861 (001) Chapter 5 Quiz - Contracts

Which of the following is not considered valid consideration for a contract?

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