Restatement (Second) of Contracts
§ 79 Adequacy of Consideration; Mutuality of Obligation
Summary
Section 79 establishes the principle that courts will not inquire into the adequacy of consideration. If a requirement of consideration is met, there is no additional requirement of equivalence in the values exchanged, mutuality of obligation, or that the promisor’s benefit equal the promisee’s detriment.
This section reflects a fundamental policy choice in contract law: courts respect the freedom of parties to make their own bargains, even seemingly lopsided ones. A peppercorn can be adequate consideration for a mansion, provided it was genuinely bargained for. The law cares about the existence of a bargained-for exchange, not its fairness.
However, gross inadequacy of consideration may be relevant as evidence that apparent consent was not genuine (suggesting fraud, duress, or mistake) or as a factor in the unconscionability analysis under § 208. The principle of § 79 does not mean courts are blind to exploitation—it means they address it through other doctrines.
Key Elements
- 1No requirement of equivalence in values exchanged
- 2No additional requirement of mutuality of obligation
- 3The benefit to the promisor need not equal the detriment to the promisee
- 4Nominal consideration may suffice if genuinely bargained for
- 5Gross inadequacy may evidence fraud, duress, or unconscionability
Practical Application
Section 79 is invoked when a party challenges a contract on the ground that the consideration was insufficient. Courts regularly cite this section in upholding non-compete agreements, option contracts, and settlements where one party later claims the deal was unfair. However, courts may look beyond § 79 to unconscionability or duress doctrines when the disparity is extreme.
Exam Relevance
Professors love to test whether students understand that adequacy is not required. A common trap is a fact pattern where someone pays $1 for a valuable option—students should recognize this is valid consideration under § 79. But be alert to follow-up issues: if the $1 was never actually paid or was a sham, the consideration may fail under § 71.