Consideration and the Formation Defenses
42 Pages Posted: 11 Oct 2014
Date Written: 2013
The common law defenses to contract formation — duress, misrepresentation or fraud, mistake, and unconscionability — are best justified historically, doctrinally, logically, and from the standpoint of policy, as a response to the plaintiff’s showing of consideration. The next-best alternative, assent, justifies too little.
This thesis is proved in two parts. Part I addresses doctrinal history. The defenses existed in the law long before assent became part of the doctrine. When the defenses developed, consideration was with promise the primary touchstone of contractual liability. The formation defenses were often formulated explicitly with reference to the doctrine of consideration, a facet of the defenses that continues in many statements of them today.
Part II addresses logic and policy. Part II.A begins with a discussion of the policy grounds for the consideration doctrine and, incidentally, defends the doctrine. Part II.B shows the logical, doctrinal, and policy coincidence of consideration and the defenses. The defenses all show more than lack of assent, but they fully respond to, and coincide conceptually with, the plaintiff’s allegation of consideration.
This Article is the second of two addressing the primacy of consideration and the resultant superfluity of assent doctrines in contract formation law. The first article, Assent Is Not an Element of Contract Formation, 61 U. Kan. L. Rev. 591 (2012), showed that assent as an element of formation merely duplicates a function already performed by the doctrine of consideration. One can have assent without consideration, but one cannot have consideration without assent. Because consideration is required, assent was and is already required as part of the consideration analysis. There is therefore no need for a separate element of assent. The first paper showed that the assent doctrines’ true function is merely to determine when consideration was given, when that time is legally relevant.
This second article shows the doctrinal and conceptual primacy of consideration and resultant superfluity of assent doctrine with respect to the formation defenses. Commentators commonly suggest that the formation defenses exist because they undercut assent. I am not claiming that the defenses do not undercut assent. They do. A primary point of Assent Is Not an Element of Contract Formation is that consideration, as both a concept and a legal doctrine, includes assent. One cannot have consideration without assent. Inasmuch as duress and misrepresentation undercut assent, they also undercut consideration. But as the defenses are phrased and as they function in contract law, they undercut more than assent. Assent therefore does not occupy the field of the defenses; it does not exercise normative authority over them. It therefore does not justify them. Something other than assent shapes the defenses’ form and function. That something else is consideration.
These conclusions combined with the historical, doctrinal, and logical arguments presented in Assent Is Not an Element of Contract Formation show that, of assent and consideration, consideration is elemental. Assent, on the other hand, is not elemental but is subordinate to and dependent on the consideration doctrine.
Keywords: contracts, consideration, assent, duress, mistake, misrepresentation, unconscionability
JEL Classification: K12
Suggested Citation: Suggested Citation