law-consideration | failure of consideration | contract formation | essential terms of a contract |
CONSIDERATION ELEMENT OF CONTRACT | MUTUALITY OF
A contract must be based upon a valid consideration or mutuality of obligation. Iacono v. Lyons, 16
S.W.3d 92, 94 (Tex. App.- Houston [1st Dist.] 2000, no pet.) (citing Texas Gas Utils. Co. v. Barrett,
460 S.W.2d 409, 412 (Tex. 1970)). Consideration may consist of either benefits or detriments to
the contracting parties. In re Turner Bros. Trucking Co., Inc., 8 S.W.3d 370, 373 (Tex. App.-
Texarkana 1999, orig. proceeding). It may consist of some right, interest, profit, or benefit that
accrues to one party, or, alternatively, of some forbearance, loss or responsibility that is
undertaken or incurred by the other party. Copeland v. Alsobrook, 3 S.W.3d 598, 606 (Tex. App.-
San Antonio 1999, pet. denied); Solomon v. Greenblatt, 812 S.W.2d 7, 15 (Tex. App.- Dallas 1991,
no writ). When illusory promises are all that support a purported bilateral contract, there is no
mutuality of obligation and, thus, there is no contract. Light v. Centel Cellular Co. of Tex., 883 S.W.
2d 642, 645 (Tex. 1994). A promise is illusory when it fails to bind the promisor, who retains the
option of discontinuing performance. See id.; In re H.E. Butt Grocery Co., 17 S.W.3d 360, 370
(Tex. App.- Houston [14th Dist.] 2000, orig. proceeding).
"Consideration is defined as `either a benefit to the promisor or a loss or detriment to the
promisee.'" Northern Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998) (quoting
Receiver for Citizen's Nat'l Assurance Co. v. Hatley, 852 S.W.2d 68, 71 (Tex. App.-Austin 1993, no
See Sacks v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) ("A meeting of the minds is necessary to
form a binding contract"); Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 659
(Tex. 2006) (―[A contract] must be supported by consideration to be enforceable.‖). We construe
these sub-issues as challenges to the legal sufficiency of the evidence supporting the elements of
consideration and mutual assent.
It is not necessary that a contracting party itself furnish the consideration to support a contract; it
may be given by another person. TCA Bldg. Co. v. Entech, Inc., 86 S.W.3d 667, 672 (Tex. App.—
Austin 2002, no pet.) (citing RESTATEMENT (SECOND) OF CONTRACTS § 71(4) (1981)). All that
is required is for the promisor to receive a benefit or the promisee to incur a detriment. Fort Worth
Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 841 (Tex. 2000). SOURCE: CORPUS
CHRISTI / EDINBURG COURT OF APPEALS - 13-11-00052-CV - 10/13/11
ELEMENT OF CONSIDERATION IN BREACH OF CONTRACT CASE
In a breach-of-contract action, the plaintiff must prove: (1) the existence of a valid contract, (2)
performance or tendered performance by the plaintiff, (3) breach of the contract by the defendant,
and (4) damages sustained by the plaintiff as a result of the breach. Valero Mktg. & Supply Co. v.
Kalama Int’l, L.L.C., 51 S.W.3d 345, 351 (Tex. App.- Houston [1st Dist.] 2001, no pet.).
To be binding, the contract must contain all essential terms and be sufficiently certain to define the
legal obligations of the parties. Stinger v. Stewart & Stevenson Servs., Inc., 830 S.W.2d 715, 720
(Tex. App.- Houston [14th Dist.] 1992, writ denied).
In addition, the contract must be supported by consideration. Alex Sheshunoff Mgmt. Servs., L.P. v.
Johnson, 209 S.W.3d 644, 659 (Tex. 2006) (Jefferson, C.J., concurring). Consideration ‘may be
either a performance or a return promise bargained for in a present exchange.’ Id. (citing Roark v.
Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991). Moreover, it is an ‘elemental principle
of contract law that ‘nothing is a consideration that is not regarded as such by both parties.’’
Connell v. Provident Life & Accident Ins. Co., 148 Tex. 311, 314, 224 S.W.2d 194, 196 (1949).
It is essential that the parties agree on the consideration supporting the contract. See TCA Bldg.
Co. v. Entech, Inc., 86 S.W.3d 667, 672 (Tex. App.- Austin, 2002, no pet.) (citing Restatement
(Second) of Contracts: Requirement of Exchange; Types of Exchange ' 71(4) (1981)). It is not
enough that one party to the agreement offered consideration that could be considered a fair
exchange for the other party’s promise if the offered consideration is not what the other party
agreed to accept; rather, the consideration must be that for which the parties bargained and on
which they agreed. See id. (explaining that one party’s proffered consideration was immaterial
when the record did not show that the proffered consideration was promised or accepted in
exchange for the other party’s obligations).
Although consideration may be implied in a written contract, there is no presumption that an oral
contract is supported by consideration. Okemah Constr., Inc. v. Barkley-Farmer, Inc., 583 S.W.2d
458, 460 (Tex. Civ. App.- Houston [1st Dist.] 1979, no writ). Consequently, it is the plaintiff’s
burden to plead and prove the element of consideration in a suit on an oral contract. Id.
A promissory note given "for value" is supported by adequate consideration and is therefore
enforceable. Suttles v. Thomas Bearden Co., 152 S.W.3d 607, 615 (Tex. App.-Houston [1st Dist.]
2004, no pet.). A promissory note is issued for "value" if it is issued as payment of, or as security
for, an antecedent claim against any person, whether or not the claim is due. Id.; see also Ward v.
Vaughn, 298 S.W.2d 862, 866-67 (Tex. Civ. App.-Galveston 1957, no writ) (explaining that
forbearance of antecedent debt was sufficient consideration for note).
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