Monday, May 18, 2020
My good friend and former colleague, Alan White (right), recently published Stop Teaching Consideration, 20 Nev. L.J. 503 (2020). As the title suggests, Alan makes a strong case that we contracts profs should stop teaching consideration to first year law students. Consideration doctrine confuses students, and courts can't get it right either. It is riddled with exceptions that we require our students to commit to memory. As Alan puts it, "Consideration doctrine, and the courts’ dogged refusal to abandon it, causes confusion, undermines good contract analysis, and subverts the values that should drive the resolution of contract disputes" (507). Alan offers a consideration-free syllabus that conveys the relevant legal doctrine without what he considers the unnecessary historical baggage of a doctrine that has outlived its usefulness. Whether or not one agrees with Alan, I encourage contracts profs to read and consider Alan's arguments before we all return to teaching in the Fall.
In Alan's view, consideration was not found in the law but invented by Holmes, Langdell, and Williston late in the 19th century. It was a mechanism for explaining why gift promises should not be enforceable, and once invented, it was applied to a range of other situations -- pre-existing duties, modifications, moral consideration, firm offers, illusory promises, and third party guarantees. In Alan's view, there are other, more-straightforward doctrines available for addressing these situations.
As to donative promises, Alan's review of the case material suggests that bargain theory plays little role in the adjudication of cases. With respect to contractual modifications, Alan highlights contexts like at-will-employment and the 2008 mortgage crisis where consideration doctrine becomes an impediment to the achievement of just, or even just reasonable, results. The UCC has already partially eliminated the requirement of consideration in connection with a promise to hold an offer open. One could move beyond the UCC and eliminate that requirement entirely. Cases on lapsed obligations do not arise often enough to justify covering them in a first-year contracts course, and Alan suggests, consideration doctrine is not very helpful in resolving them. Illusory promise cases are rarely resolved on the basis of consideration doctrine, and even when they are, they could just as easily have been decided based on unconscionability or public policy. Third-party guarantees are routinely enforced notwithstanding the lack of additional consideration that benefits the guarantor.
Alan then proceeds to a review of cases in which consideration doctrine is invoked. He finds that he can categorize such cases as follows: sometimes courts invoke consideration doctrine but do not decide the case on that basis; sometimes they do decide the cases based on consideration but they could have decided them on some other basis; and sometimes courts misapply consideration doctrine.
Finally, the revised contracts syllabus replaces references to "consideration" with "bargain theory" or "exchange theory." Alan relegates "consideration" to the dustbin of antiquated legal terms like "assumpsit" and "trespass on the case." More alarmingly, he would eliminate coverage of donative promises. No more Hamer v. Sidway; sorry Charlie, no Dougherty v. Salt. The course covers bargain theory, supplemented with detrimental reliance, promises recognizing past obligations, and restitution. The rest of material can be taught without requiring students to learn consideration doctrine, except as a historical curiosity.
Having summarized Alan's case, tomorrow I will offer my objections. Stay tuned!