Paid on Both Sides: Quid Pro Quo Exchange and the Doctrine of

690

JED LEWINSOHN

Paid on Both Sides: Quid Pro Quo Exchange and the

Doctrine of Consideration

abstract. I scratch your back, you scratch mine—how must these services relate in order

to constitute a quid pro quo exchange? In the ordinary quid pro quo exchange, each party agrees to

do their part in order to get the other party to do theirs; each conditions their own willingness to

perform on the willingness of the other; and each regards the other as obligated to do their part in

light of their agreement. But not all exchanges are ordinary, and a proper analysis is of considerable

practical and theoretical signiﬁcance. In the law alone, quid pro quo ﬁgures prominently in a wide

range of contexts—civil as well as criminal, public as well as private—and lies at the core of a num-

ber of raging controversies concerning ocial corruption, insider trading, and other matters. This

Article oers the ﬁrst philosophical analysis of quid pro quo exchange in the Anglophone tradi-

tion.

This analysis is framed by an investigation of the doctrine of consideration in contract, the

site of the law’s most inﬂuential treatment of quid pro quo. The textbook deﬁnition of considera-

tion relies on a conception of exchange—ﬁrst elaborated by Oliver Wendell Holmes, Jr.—that is

couched in the motivational terms of reciprocal inducement. On this motivational conception, a

quid pro quo is deﬁned in terms of the instrumental motives that typically animate it, where each

service is rendered as a means of bringing about the other. This Article argues against the motiva-

tional account of exchange and oers an original account in its place. This account takes as a start-

ing point the traditional common-law deﬁnition of exchange as reciprocal payment. On the recip-

rocal payment account of exchange that emerges, two performances constitute a quid pro

quo when the parties regard those performances as satisfying two conditions: ﬁrst, that each per-

formance satisﬁes the debt incurred by the other, and second, that a er the sequence of perfor-

mances neith er party shall owe the other anything on account of the other’s performance. To-

gether, these conditions imply that, in the wake of the performances, the parties will be “all paid

up” as far as the performances are concerned. Finally, this Article oers an alternative consideration

rule that incorporates its deﬁnition of reciprocal payment. This alternative rule locates the required

element of bargain or exchange within the apparent terms of the agreement, and not in the mo-

tives—actual or apparent—that led the parties to assent to those terms. The reciprocal payment

conception of consideration is superior to the textbook deﬁnition at the levels of both justiﬁcation

and ﬁt, and sidesteps the problems that have made the doctrine an object of pillory in so many

quarters.

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author. Assistant Professor of Philosophy, University of Pittsburgh. In writing this article, I

learned a great deal about debt, not least by incurring so much of it. For extensive discussion or

comments on this article or ancestors of it, I am considerably grateful to James Brandt, Kevin Da-

vis, Rowan Dorin, Ben Eidelson, David Enoch, Noah Feldman, Charles Fried, John Goldberg, Eli

Hirsch, Marcel Kahan, Madhav Khosla, Gregor y Klass, Daniel Markovits, Le v Menand, Richard

Moran, Liam Murphy, David Owens, Ketan Ramakrishnan, Arthur Ripstein, Tim Scanlon, Sam-

uel Scheer, Kieran Setiya, James Shaw, Emile Simpson, Henry Smith, Martin Stone, Nandi

Theunissen, Megan E. Vincent, Fred Wilmot-Smith, and David Wishnick, as well as to audiences

at NAWPLT, NYU School of Law, Hebrew University, and the Harvard Society of Fellows. Special

thanks to Jonathan Sarno and the other editors at the Yale Law Journal for superb, tireless editing

and for razor-sharp comments and suggestions. Finally, the Harvard Society of Fellows provided

the ideal community in which to write this article, and I owe an immense debt to the nourishing

support of sta and fellows alike.

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article contents

introduction 693

i. langdell’s folly 704

ii. quid pro quo exchange: a philosophical account 715

A. The Motivational Theory of Exchange: A Critique 720

B. Remuneration Theory of Exchange: A Defense 724

iii. two doctrines of consideration 739

A. The Remuneration Theory of Consideration 739

B. Testing the Theories 741

1. Conditional Gi Promises 741

2. Contract Modiﬁcations 744

3. The Rationale of the Consideration Requirement 752

conclusion 768

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introduction

Under the common law, contractual liability attaches to commitments made

to others. Unlike the law of property, which lays down not only the legal conse-

quences of the various forms of ownership but also the conditions of ownership

itself, the common law of contract piggybacks on an independent social practice

that it does not purport to create or deﬁne—namely, the practice of committing

to courses of conduct by making promises or entering into agreements.

Since

interpersonal commitments are pervasive features of social life—they are made

in all contexts in which humans interact cooperatively and in every medium in

which they communicate—the most basic task confronting this body of law is to

demarcate the sphere of legally enforceable commitments and thereby to deter-

mine the domain of the contractual. In the common-law tradition, the broadest

and most visible line separating enforceable and unenforceable commitments is

drawn by the doctrine of consideration, a fact that explains the doctrine’s endur-

ing position in the law-school curriculum. Like the doctrines of ﬁrst possession

in property, assault in tort, and nondelegation in administrative law, considera-

tion’s prominence is due not to the frequency with which it arises in litigation

but to the fundamental position it purports to occupy in the structure of a major

area of law.

Notwithstanding these pretensions, it cannot be said that the doctrine of

consideration, in its modern form, has performed this basic demarcating func-

tion in a consistent or principled manner. At least since the late nineteenth cen-

tury, and quite likel y since its origins in the sixteenth, the doctrine of considera-

tion in contract law has been understood to rest on a distinction between

exchange transactions (i.e., bargains) and gratuitous transactions, and to limi t

the legal enforcement of promises and agreements, unless under seal, to those

belonging to the former category.

This general conception of consideration—

1. To draw out the contrast a little further, we may note that a deeds-registration syste m of land

management, for example, does not constitute an independent social practice but one that is

established and maintained by law. This contrasts with the case of contracts, where a practice

of interpersonal commitments is presupposed and endowed with legal signiﬁcance. Thus, the

Second Restatement of Contracts deﬁnes “contract” as “a promise or a set of pro mises for the

breach of which the law gives a remedy, or the performance of which the law in some way

recognizes as a duty,” RESTATEMENT (SECOND) OF CONTRACTS § 1 (AM. LAW I NST. 1981), and

deﬁnes “promise” as “a manifestation of inte ntion to act or refrain from acting in a speciﬁed

way, so made as to justify a promisee in understanding that a commitment has been made,” id.

§ 2 (emphasis added).

2. For historical background concerning the doctrine of consideration (and the common law of

contracts more generally) I rely primarily on the work of J.H. Baker, D.J. Ibbetson, and A.W.B.

Simpson. See generally JOHN BAKER, AN INTRODUCTION TO ENGLISH LEGAL HISTORY 338-85

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what is known as the bargain theory of consideration—has been reduced in mod-

ern times to a more speciﬁc rule, which can be traced to Christopher Columbus

Langdell’s textbook deﬁnition of consideration as “the thing given or done by

the promisee in exchange for the promise.”

This modern consideration rule, re-

quiring as a condition of contractual validity that the promisor receive something

in exchange for her promise, has been handed down to at least four generations

of students together with a number of well-known problems that continue to

hamper the doctrine, both in theory and in practice.

These problems include

certain undesirable or counterintuitive applications of the rule (in areas such as

conditional gi promises, contract modiﬁcations, option contracts, guarantee

agreements, and social and domestic agreements) as well as a failure to identify

a plausible rationale that can be used to make sense of it. As a result of these

problems, many have called for the wholesale eradication of the bargain require-

ment.

The principal aim of this Article is to open up space between the general

conception and the speciﬁc rule and to show that many of the familiar diculties

with consideration result from the speciﬁc rule rather than from the general con-

ception. My purpose is not so much to defend the bargain requirement as it is to

render it intelligible; only then will we be able to ask whether consideration is a

doctrine worth keeping and what, if anything, might take its place.

By claiming that the modern rule badly implements the bargain requirement,

I mean more than that the rule emphasizes the wrong aspects of a bargain, or

takes too narrow a view of the range of objects whose exchange would satisfy the

requirement. Rather, my claim is that the modern rule implicitly relies on a se-

ductive but altogether mistaken conception of what a bargain or exchange is.

(5th ed. 2019) [hereinaer B AK ER, ENGLISH LEGAL HISTORY]; D.J. IBBETSON, A HISTORICAL

INTRODUCTION TO THE LAW OF OBLIGATIONS 24-38, 71-94, 126-51, 202-61 (1999) [hereinaer

IBBETSON, AHISTORICAL INTRODUCTION]; A.W.B.SIMPSON, A HISTORY OF THE COMMON LAW

OF CONTRACT: THE RISE OF THE ACTION OF ASSUMPSIT 199-488 (1975); J.H. Baker, Origins of

the “Doctrine” of Consideration, 1535-1585, in ON THE LAWS AND CUSTOMS OF ENGLAND: ESSAYS

IN HONOR OF SAMUEL E. THORNE 336 (Morris S. Arnold et al. eds., 1981) [hereinaer Baker,

Origins of Consideration]; David J. Ibbetson, Consideration and the Theory of Contract in Six-

teenth Century Common Law, in TOWARDS A GENERAL LAW OF CONTRACT 67 (John Barton ed.,

1990) [hereinaer Ibbetson, Consideration and the Theory of Contract].

3. C.C. LANGDELL, A SELECTION OF CASES ON THE LAW OF CONTRACTS WITH A SUMMARY OF THE

TOPICS COVERED BY THE CASES 1011 (Boston, Little, Brown, & Co. 2d ed. 1879) (emphasis

added).

4. This is not to say that the consideration rule has not changed during this time. Most notably,

this period includes, in the United States, the rise and fall of the beneﬁt-detriment require-

ment conceived of as independent of the exchange requirement. See E. ALLAN FARNSWORTH,

CONTRACTS § 2.2, at 47 (4th ed. 2004).

5. See, e.g., ANDREW BURROW S, UNDERSTANDING THE LAW OF OBLIGATIONS 197 (1998).

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695

While this conception was implicit in Langdell’s deﬁnition, it was rendered ex-

plicit the following year by Oliver Wendell Holmes, Jr., and later codiﬁed (and

slightly modiﬁed) in the Second Restatement of Contracts.

Thus, in its boldest

formulation, my claim is that two giants of the common law, Langdell and

Holmes, mangled a central doctrine of contract law by severing the link between

the doctrine of consideration and the proper conception of a bargain. This error,

in my view, spawned confusion that has impeded contract law to this day. Given

a bett er understanding of the notion of bargain or exchange and a doctrine of

consideration refashioned so as to make contact with it, many of the problems

associated with the modern rule can be resolved.

Quite apart from consideration, there is ample independent reason to want

an adequate account of quid pro quo exchange, and it is another central aim of

this Article to use the doctrine of consideration to develop and anchor such an

account. Quid pro quo exchange is one of the basic modes of giving and receiving

beneﬁts, and it is both broader and narrower than is sometimes supposed. On

the one hand, the category includes more than narrowly economic activit y (such

as the sale and barter of the marketplace or wage labor arrangements in the

workplace), and embraces transactions as varied as plea bargains, prisoner ex-

changes, and bribes. On the other hand, while quid pro quo is a species of reci-

procity (that is, of “returning kindness with kindness”), it should not be con-

ﬂated with the more general category. There are many ways in which two

individuals can confer beneﬁts upon one another without carrying out a quid

pro quo. For example, when, without any discussion of reward, an individual in

distress receives help from a sympathetic passerby, the recipient may later be

moved to send a gi (for instance, choc olate or wine) to the helper in a gesture

of gratitude. Although each person has given something to the other, in the form

of goods or services, no quid pro quo has occurred, and it would be incorrect

(and not merely cynical) to say that the help was given in exchange for the gi,

and vice versa.

The theoretical challenge, then, is to identify the species of reciprocity that

constitutes an exchange. This is a task well worth pursuing, as it is dicult to

overstate the practical and theoretical signiﬁcance of the exchange form. In the

6. See infra notes 28-50 and accompanying text.

7. Despite the speciﬁcity of these allegations, I hasten to clarify that my central concerns are

conceptual, not historical. If Langdell and Holmes had precursors, my charges would apply

to them as well. However, regardless of what was original to them, there is no denying Lang-

dell and Holmes’s massive inﬂuence in the modern development of this body of law.

8. Thus, if the helper had been a public ocial acting in an ocial capacity, accepting the gi in

such a situation might amount to an unlawful gratuity, but—if the help was genuinely ren-

dered gratuitously and not on the understanding that the gi would follow—it would not

constitute bribery.

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law alone, quid pro quo ﬁgures prominently in a wide range of legal contexts—

civil as well as criminal, public as well as private—and lies at the heart of a variety

of raging legal controversies concerning ocia l corruption, insider trading, and

other matters. Although quid pro quo is a transsubstantive concept in the law,

we ﬁnd the law’s most developed and inﬂuential account of it in the context of

the doctrine of consideration. Indeed, one ﬁnds in the legal literature surround-

ing this doctrine two fundamentally dierent conceptions of quid pro quo. De-

veloping these accounts and subjecting them to critical scrutiny will allow us to

produce an adequate theory that captures the essential el ements of the exchange

form.

In kee ping with the norms of the law-review genre, the remainder of the

introduction summarizes, in broad outline, the arguments that follow. As we

have seen, Langdell’s deﬁnition of consideration insists on an exchange relation

between the consideration and the promisor’s promise (rather than the promised

performance). But this exclusive focus on the commitment itself as the object of

exchange places it in tension with the traditional common-law conception of

bargain or exchange, according to which the objects of an exchange are given in

payment, or remuneration, for each other. For, on the one hand, the modern

consideration rule is satisﬁed only if the parties’ acts of assent themselves stand

in an exchange relation to one another.

And yet, on the other hand, there are

many valid contracts—for example, ordinary sales contracts contemplating the

transfer of goods for money—where neither the parties themselves nor outside

observers would regard the parties’ acts of assent (in contrast with their ensuing

performances) as constituting payment or remuneration for anything. The mod-

ern consideration rule thus required the development of a new conception of

exchange, which was rendered explicit ﬁrst by Holmes and then in the Second

Restatement. According to this account, classifying two performances as a quid

pro quo is a way of characterizing the apparent motives of the parties rendering

those performances. Speciﬁcally, to subsume two acts (promissory or otherwise)

under the exchange concept is to describe each one as rendered with the apparent

9. This is because it is not enough that a promise was made in the hope or expectation of getting

something in exchange for it; rather, a promise satisﬁes the modern consideration require-

ment just in case the promisor actually does receive something in exchange for making it.

Since all agree that the formation of any valid contract is coterminous with the acceptance of

the oer, the consideration the promisor receives must be given when the oer is accepted. It

follows that in a bilateral contract (where the oer is accepted by a counterpromise) the mod-

ern consideration requirement is satisﬁed just in case each promise is given in exchange for

the other, while in a unilateral contract (where the oer is accepted by a nonpromissory act)

it is satisﬁed just in case the act which constitutes the acceptance of the oer stands in an

exchange relation to the promise. For a characterization of the distinction between unilateral

and bilateral contracts, see infra note 29.

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aim of inducing the other.

Combining Langdell’s deﬁnition with this account

of exchange, which I will call the recipr ocal-inducement account, allows us to

reformulate the modern consideration rule: for an agreement to satisfy the rule,

the oer must be made with the apparent aim of inducing the acceptance

(whether counterpromise or performance) and the acceptance must be extended

with the apparent aim of binding the oeror to her terms.

Although there is evidently some connection between doing A in exchange for

B and doing A in order to get B, this motivational account of exchange is both

overinclusive and underinclusive. Counterexamples to the theory will be dis-

cussed in Part II, but we may observe at the outset that its con ditions are fre-

quently satisﬁed by plans to coordinate activities between friends and family

10. I am here using “acts” in its broad sense to refer to courses of conduct that might consist in

some combination of acts or omissions.

11. In saying that the modern rule requires an alternative conception of exchange (other than the

payment conception), I am of course assuming that the parties themselves, and outside ob-

servers, would be co rrect in denying that the acts of assent in typical sales contracts (among

other valid contracts) stand in payment relations to each other. Although I will argue for this

assumption below—as I will show in Part I, the relevant intuitions have considerable force,

and I am aware of no plausible explanation for them other than that they reﬂect correct appli-

cations of our concept of payment—I hasten to clarify that none of the main claims of this

Article rely on it. Accordingly, if one is unwilling to be guided by ordinary usage (however

ﬁrm), one may say that the modern rule requires an alternative conception of payment (dier-

ent than the one implicit in the reported intuitions) rather than an alternative conception of

exchange (dierent than the payment conception). An d if one were to take this course, one

may then view Part II of my paper as an elaboration and evaluation of competing conceptions

of payment (instead of just competing conception s of exchange), and Part III as the elabora-

tion of a non-Langdellian consideration rule fashioned out of my preferred conception of pay-

ment. Additionally, I fully acknowledge that some writers who have adopted the modern rule

have attempted to preserve the connection between consideration and payment by substitut-

ing “price” for “exchange” in the Langdellian formula. Most prominently, in the ﬁrst of the

editions of Pollock’s inﬂue ntial Principles of Contract to follow the publication of Langdell’s

deﬁnition (i.e., Pollock’s third edition, published in 1881), Pollock adopts Langdell’s deﬁni-

tion but substitutes “price” for “exchange”: “An act or forbearance of the one party, present

or promised, i[s] the price for which the promise of the other is bought, and the promise thus

given for value is enforceable.” F

REDERICK POLLOCK, PRINCIPLES OF CONTRACT 179 (London,

Stevens & Sons 3d ed. 1881). And Samuel Williston adopted the same terminology in his in-

ﬂuential treatise. See, e.g., 1 SAMUEL WILLIS TON, THE LAW OF CONTRACTS § 574, at 1097-98

(1st ed. 1920). However, calling a tail a leg does not make it one, and it is instructive that the

most distinguished students of the subject have demonstrated discomfort with Pollock’s ter-

minology. Patrick Atiyah, for example, occasionally paraphrases Pollock’s deﬁnition, but, si-

lently and without comment, consistently places the term “price” within scare quotes so as to

signal the incorrect usage. See, e.g., P.S. ATIYAH, Consideration: A Restatement, in ESSAYS ON

CONTRACT 179, 207 (1990) (“[C]onsideration, in short, is the ‘price’ of the promise.”). See

also Atiyah’s earlier use of the same quotation mark in an uncited formulation in the same

paper. Id. at 181.

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members (indeed, between members of preexisting cooperative units more gen-

erally) even when neither the parties themselves nor outside observers would

regard such plans, or their execution, as constituting a quid pro quo. This is

worth highlighting since it bears considerably on the challenge of identifying a

plausible rationale for the consideration rule. As I will argue in Part III, its most

plausible justiﬁcations regard its distinction between the bargained-for and the

gratuitous as a legally tractable (albeit rough and ready) way of capturing an

important distinction between social contexts or spheres. Consideration, accord-

ing to this family of views, serves chieﬂy to exempt promises and agreements

formed in certain social contexts from legal enforcement. Such explanations are

not available to proponents of the modern rule, however, since its conditions are

satisﬁed pervasively by agreements lying on both sides of any relevant social di-

vide (such as that between personal and impersonal domains). By obscuring

these explanations, the modern rule fairly exposes the doctrine to the charge,

frequently made, that it is a senseless historical anachronism.

The philosophical mistake at the heart of the modern consideration rule is

also the source of many of the well-known problems concerning concrete cases.

Some of these diculties relate to counterintuitive results: given that it embod-

ies a mistaken conception of bargain, the modern rule unsurprisingly treats

transactions that are patently gratuitous as though they were bargains, and vice

versa. For example, if a genuine bargain requirement rules out anything at all, it

surely rules out informal donative promises—that is, commitments to give

someone a gi  or do someone a favor without expectation of payment—as can-

didates for legal enforcement.

However, as I will show, the modern rule is sat-

isﬁed by many genuinely donative promises, namely, those involving conditions

imposed by a donor who is eager to donate (for instance, a parent, eager to help

a child pursue som e project, promises to gi a thousand dollars provided the

child agrees not to spend any of it on wine). Another perennial problem for the

doctrine concerns “fair and equitable” modiﬁcations of contractual terms, such

as a promise to pay more for a service than the price originally agreed upon due

to an unanticipated rise in the cost of providing that service. In such cases of

12. This was indeed Holmes’s own take on the matter. See OLIVER WENDELL HOLMES, JR., THE

COMMON LAW 228-47 (Belknap Press of Harvard Univ. Press 2009) (1881). For another prom-

inent expression of the historical-anachronism view, see Chief Judge Cardozo’s opinion in

Allegheny College v. National Chautauqua County Bank, 159 N.E. 173 (N.Y. 1927).

13. I follow many others in marking a distinction between the broader category of the gratuitous

promise (that is, of a promise that does not belong to a bargain) and the narrower category

of the gi (donative) promise (that is, the promise to give a gi or perform an unremunerated

favor). See, e.g., Edwin W. Patterson, An Apology for Consideration, 58 COLUM.L. REV. 929, 933

n.24 (1958).

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preexisting duties, a strict application of the modern rule oen fails to ﬁnd con-

sideration. Courts have reasoned, for example, that the promise to pay a higher

price could not be made in exchange for the promise to perform the service be-

cause the latter promise had already been bargained for and secured in the initial

contract.

This outcome is both a counterintuitive application of a bargain re-

quirement—aer all, the transaction clearly remains a quid pro quo exchange of

money for a service aer the modiﬁcation of the terms—and a target of heavy

criticism on policy grounds.

Other well-known problem cases include garden-

variety commercial agreements that would not qualify as bargains on any char-

acterization, such as ﬁrm oers (that is, commitments not to rescind a particular

oer) or guarantee agreements (that is, commitments to another’s creditor to

serve as the debtor’s guarantor). The Second Restatement makes an exception

of these cases, but cannot explain the special treatment on principled grounds.

14. See, e.g., Davis & Co. v. Morgan, 43 S.E. 732, 732 (Ga. 1903) (“[The evidence] proved a prom-

ise to give more than was due, and to pay extra for what one was already legally bound to

perform. The employer, therefore, received no consideration for his promise to give the addi-

tional money at the end of the year.”).

15. To be sure, grounding the preexisting-duty rule in the consideration doctrine predates the

publication of Langdell’s treatise, and is usually traced to Lord Ellenborough’s (somewhat

notorious) opinion in Stilk v. Myrick (1809) 170 Eng. Rep. 1168; 2 Camp. 317. However, Lord

Ellenborough’s sparse remarks do not include a deﬁnition of consideration, and it would be

rash to impute to him Langdell’s deﬁnition. (Too many alternative deﬁnitions of considera-

tion are consistent with the holding; in particular, it might derive solely from a commitment

to some version of a “legal beneﬁt-detriment” requirement.) In any event, it is worth noting

that Ellenborough’s consideration analysis marked a deviation from prior common-law prac-

tice of deciding preexisting duty cases solely under the rubric of public policy (and not con-

sideration). For a classic analysis, critical of Ellenborough’s deviation, see James Barr Ames,

Two Theories of Consideration: I. Unilateral Contracts, 12 HARV. L. REV. 515, 521, 524-25 (1899)

[hereinaer Ames, Unilateral Contracts] (“[T]he [preexisting-duty] rule is commonly

thought to be a corollary of the doctrine of consideration. But this is a total misconception.

The rule is older than the doctrine of consideration and is simply the survival of a bit of formal

logic of the mediӕval lawyers. . . . Lord Ellenborough, unaware of the true origin of the rule

and unacquainted with [the relevant] cases of the seventeenth century, put forward the novel

view that the rule was based upon the doctrine of consideration. . . .This [position of] Lord

Ellenborough, false gloss though it be, has been generally followed by the courts, and is re-

sponsible for the greater part of the objectionable applications of the doctrine of consideration,

whereby the reasonable expectations of business men have been disappointed.”). See generally

Ames, Unilateral Contracts, supra; James Barr Ames, Two Theories of Consideration: II. Bilateral

Contracts, 13 HARV. L. REV. 29 (1899) [hereinaer Ames, Bilateral Contracts].

16. In the case of ﬁrm oers (option contracts) the Second Restatement still requires the recita-

tion of “a purported consideration.” RESTATEMENT (SECOND) OF CONTRACTS § 87 (AM. LAW

INST. 1981). But it makes an exception of the consideration rule both in recognizing that nom-

inal consideration is “regularly held sucient” and in holding that “the option agreement is

not invalidated by proof that the recited consideration was not in fact given.” Id. § 87 cmts. b

& c.

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Gestures are made in the direction of Lon Fuller’s functional explanation—ap-

pealing to the alleged evidentiary, cautionary, and channeling functions of the

bargain requirement—with the intimation that, bargains or not, these functions

are anyway served by the agreements in question.

However, as I demonstrate

in Part III, Fuller’s functional explanation is not only unconvincing, but also un-

available to proponents of the modern rule. For, although it is not immediately

apparent, Fuller’s account also relies on the idea that the distinction between the

bargained-for and the gratuitous tracks an important divide between social con-

texts, a view that cannot be accommodated by a motivational account—such as

the modern reciprocal-inducement account—whose conditions lack any sensi-

tivity to social distinctions. Accordingly, in the absence of any plausible rationale,

the Restatement’s exceptional treatment can only be viewed as ad hoc.

The defects of the modern consideration rule can be traced to the defective

conception or bargain lying at its core. Formulating a better rule is possible, but

doing so requires a better grasp of the concept of bargain or exchange. The ven-

erable common-law deﬁnition of bargain or exchange as reciprocal payment or

remuneration, according to which two performances constitute a quid pro quo

exchange if each performance serves as payment or remuneration for the other,

provides the basis of this better account. The traditional authorities le the cru-

cial notion of payment undeﬁned, however, which has allowed the law to lose its

handle on the exchange concept. Accordingly, Part II provides an original theory

of quid pro quo exchange that doubles as a theory of reciprocal payment. On this

reciprocal-remuneration account, classifying performances as an exchange is a

way of characterizing the normative signiﬁcance of the performances, and not

the motives of the parties. More precisely, according to this view, two perfor-

mances constitute a quid pro quo when the parties regard those performances as

satisfying two con dition s: ﬁrst, that each performance satisﬁes the debt incurred

by the other, and second, that aer the sequence of performances neither party

shall owe the other anything on account of the other’s performance. Together,

these conditions imply that, in the wake of the sequence of performances, the

parties will be “all paid up” as far as the performances are concerned.

The ﬁrst condition makes reference to the notion of debt, a species of obli-

gation. While the English language distinguishes between debt and nondebt ob-

ligations (one’s obligation to repay a loan is a debt, while one’s obligation to

ensure that one’s child has lunch money before leaving the house is not), there

has been, as far as I am aware, no substantial eort by theorists to identify debt’s

17. See Lon L. Fuller, Consideration and Form, 41 COLUM. L. REV. 779, 800-01 (1941).

paid on both sides

701

distinctive features.

Without a proper understanding of debt, however, it is not

possible to dierentiate quid pro quo exchanges from the broader class of “I will

if you will” agreements or mutually beneﬁcial collaboration more generally. Part

II, accordingly, provides an account of debt in service of its account of exchange.

According to this account, the mark of a debt is that performance—for example,

paying a creditor the sum of money owed on account of a particular loan—does

not guarantee satisfaction. For example, one may pay a creditor the exact sum

that one owes witho ut discharging one’s debt, as when one’s payment is for the

purchase of additional merchandise sold by the same creditor. What is needed

to satisfy a particular debt is no t merely a rendition of the required performance,

but a rendition in satisfaction of that speciﬁc debt (and not some other one). This,

in turn, raises the question of how one succeeds in matching particular perfor-

mances with particular obligations, and the answer may lie in either conven-

tional rules or the mutual understanding of the parties. This distinguishing fea-

ture of debt explains bot h the possibility of accumulating multiple debts (each

calling for its own rendition of the same type of performance) and widely ob-

served strictures against “double counting.”

The second condition adds to the ﬁrst that following the performances each

party emerges with no lin gering obligations arising from the other’s perfor-

mance. In particular, this condition rules out lingering debts of gratitude and

duties to reciprocate, unless these arise from aspects of the transaction that are

distinct from the required performance.

This account of exchange can be used as the basis of a bargain requirement

that avoids many of the well-known defects that plague the prevailing account.

According to the remuneration theory of consideration, a promise satisﬁes the

consideration requirement if it can be in ferred that the parties regard either the

promised performance, or the promise itself, as standing in a relation of recip-

rocal payment (that is, in an exchange relation) to either the performance, or the

promise, of the promisee.

This formulation, while registering that a promise

18. Alexander Douglas’s The Philosophy of Debt does not squarely address the question of how to

understand the distinction between those obligations that are, and those that are not, charac-

terized in terms of debt, instead focusing, inter alia, on “what we should do about the many

things we call debt in each of many various sorts of circumstance.” ALEXANDER DOUGLAS,THE

PHILOSOPHY OF DEBT, at xiii (2016). Moreover, Douglas’s rich discussion in Part I concerning

the relation between a debt and a duty to pay consistently fails to distinguish between the

conceptual and normative questions. See id. at 1-25.

19. This formulation of the doctrine of consideration is intended to incorporate the account I have

given of the relationship of reciprocal payment. Thus, although some advocates of the modern

rule continue to regard the reciprocal-inducement account of consideration as describing a

species of payment, see supra note 11, and might therefore view this statement of my position,

the yale law journal 129:690 2020

702

can be exchanged—as it arguably is when an insurance policy, or a bond, is issued

for valu e

—also reﬂects that it is oen the contemplated performances, rat her

than the promises themselves, that lend the transaction the character of an ex-

change.

This version of the consider ation rule does not result in treating bar-

gains as though they were gratuitous transactions or vice versa. Conditional don-

ative promises (when genuinely donative) do not satisfy the consideration test,

since the donee’s fulﬁllment of the condition does not stand in a (reciprocal)

payment relation to the donor’s gi (or commitment to give it). Likewise, the

doctrine of consideration poses no obstacle for contract modiﬁcations: when two

parties agree to alter the price of a particular service, they do not thereby dislodge

its status as an exchange. What is contemplated, before and aer the modiﬁca-

tion, is a quid pro quo exchange—money for a service.

The remuneration theory of consideration also has an intelligible rationale—

one that enjoys substantial historical corroboration and that provides a princi-

pled basis for the traditional exceptions in cases such as ﬁrm oers and guarantee

agreements. As many have observed, friends and family members tend to shy

away from the quid pro quo form in favor of other modes of reciprocity when

conferring and receiving beneﬁts among themselves.

This empirical observa -

tion receives support from the remuneration theory of exchange, which exposes

the reasons friends and family sometimes have to avoid the exchang e form.

This

observed tendency, together with the contestable, but plausible, normative as-

sumption that the law ought not to enforce promises between intimates unless

those intimates expressly enlist the law, typically by invoking legal formalities at

the time of formation, provides a rationale for the bargain requirement. On this

on its own, as consistent with their views, the analysis I will give of reciprocal payment does

present a genuine alternative to the orthodox view of consideration.

20. As I will explain below, it is possible to characterize these transactions dierently, such that

what is purchased is a conditional performance rather than a promise to perform if a condition

is met. See infra note 92. If such alternative characterizations are correct, a nondisjunctive

statement of the consideration rule is possible. According to the nondisjunctive version, a

promise satisﬁes the consideration requirement if it can be inferred that the parties regard

their performances as standing in a relation of reciprocal payment (that is, in an exchange

relation) to each other. That said, I see no problem with the disjunctive formulation, which

is, despite appearances, simpler and less restrictive than the nondisjunctive version. A er all,

the disjunctive formulation may be reformulated as follows: if the apparent terms of an agree-

ment contemplate an exchange between the parties, then that is sucient.

21. Of course, this does not mean that the performances need to be carried out for the agreement

to satisfy the consideration requirement. Rather, it is enough that an objective interpretation

of the agreement construes the performances not merely as required, but required as payment

for the other.

22. See infra note 137.

23. It also explains the exceptions to the observed tendency by exposing the reasons they some-

times have to use the form.

paid on both sides

703

interpretation, the consideration rule does not identify conditions that give the

law reason to enforce a promise. That is, the rule does not rest on the normative

position that a promise ought to be enforced because of its relation to a bargain.

Rather, the point of the bargain requirement is to identify (however roughly) a

class of promises—informal promises in social and domestic contexts—that the

law has reason not to enforce, either because the law’s general reasons for enforc-

ing agreements do not apply in these contexts or because features of these con-

texts override the law’s general reasons in favor of enforcement. This rationale

not only renders the rule intelligible, but also explains why the law draws (and

should draw) exceptions for forms of commercial commitment that, while not

belonging to an exchange, tend not to be used by intimates. As I have said, the

rationale also receives signiﬁcant historical corroboration. I have already ob-

served that the modern rule of consideration is not sensitive to social context,

and so not up to the task of screening for informal social and domestic agree-

ments. Accordingly, if the rationale is correct, one would expect that the adop-

tion of the modern rule by legal authorities would lead to the introduction or

invocation of some other doctrinal mechanism to pe rform this function. When

we consult the historical record, this is indeed what we ﬁnd. In particular, the

legal-intent requirement (requiring an intent to establish legal relations as a con-

dition of liability), or some variation of it, has been consistently wheeled in by

legal authorities in both England and America to avoid enforcement of informal

social and domestic agreements as soon as the modern consideration rule was

adopted.

This Article proceeds as follows. Part I addresses in more detail the relation

between the textbook deﬁnition of consideration and the textbook speciﬁcation

of that deﬁnition in the motivational terms of reciprocal inducement. It demon-

strates that by insisting, in all cases, upon an exchange relation between the con-

sideration and the promisor’s promise (rather than his or her performance), the

textbook deﬁnitio n of consideration commits the theorist to rejecting this tradi-

tional deﬁnition of bargain or exchange and to embracing instead the motiva-

tional alternative (in terms of reciprocal inducement). Part II criticizes the mo-

tivational theory of quid pro quo exchange and provides in its place an original

philosophical account that doubles as a theory of reciprocal payment. Analyzing

quid pro quo exchange requires analyzing in turn the notion of debt, which, like

quid pro quo exchange, is as socially important as it has been philosophically

neglected. Finally, Part III shows that the conception of exchange as reciprocal

payment can be used to fashion an alternative consideration rule, one that avoids

many of the well-known diculties associated with the prevailing rule, and that

can be rendered intelligible by a plausible, historically compelling rationale.

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704

i. langdell’s folly

The doctrine of consideration conditions a promisor’s liability on some suit-

ably related, ostensibly desired course of conduct on the part of the promisee. In

so doing, it enshrines a form of mutuality or reciprocity at the heart of the com-

mon law of contracts. But there are many forms of mutuality and reciprocity, and

not all can lay claim to an association with the doctrine of consideration. Alt-

hough a sequence of good turns between neighbors or the alternating, synchro-

nized movements of rowers attempting to reach a distant shore may be paradig-

matic examples of reciprocity and mutuality, neither one falls within the ambit

of the doctrine. At least since the late nineteenth century, and quite probably

from the doctrine’s origins in the sixt ee nth century, the requiremen t of consid-

eration has been understood to rule out informal, gratuitous promises or agree-

ments as candidates for legal enforcement.

On this understanding, the form of

reciprocity singled out by the doctrine of consideration is the doing or giving of

something in exchange for something else, also known as quid pro quo ex-

change.

To say that the doctrine of consideration imposes some exchange (alterna-

tively, bargai n) requirement on enforceable promises marks no departure from

prevailing understandings. There is perhaps no single deﬁnition in all of contract

law—perhaps all of private law—more familiar to law students than the Second

Restatement’s deﬁnition of consideration, which is couched plainly in terms of

exchange.

And while there has been considerable debate among historians con-

cerning whether, at its advent, the doctrine of consideration had anything to do

with reciprocity at all, both sides of that debate take for granted that, if the early

24. The restriction to informal promises reﬂects the traditional rule that “[a] gratuitous promise

becomes legally binding if it is made under seal or if it is made in exchange for ‘nominal’

consideration, such as a peppercorn or £1.” STEPHEN SMITH, CONTRACT THEORY 217 (2004).

Of course, when such formalities are not recognized in a given jurisdiction—as they are not

in the majority of American jurisdictions, see FARNSWORTH,supra note 4, § 2.11, at 72, §§ 2.16-

.17, at 86-88—the practical signiﬁcance of this limitation becomes nil. In modern times, prom-

issory es top pel has also been used to enforce certain promises absent consideration. However,

the nature and content of the estoppel principle, as well as its relation to the consideration

doctrine, have been greatly debated and lie beyond the scope of the present inquiry. For one

conception of the estoppel doctrine that is fully compatible with the theory of consideration

elaborated in this paper, see Daniel A. Farber & John H. Matheson, Beyond Promissory Estoppel:

Contract Law and the “Invisible Handshake,” 52 U. CHI. L. REV. 903 (1985).

25. RESTATEMENT (SECOND) OF CONTRACTS § 71 (AM. LAW INST. 1981) (“(1) To constitute con-

sideration, a performance or a return promise must be bargained for. (2) A performance or

return promise is bargained for if it is sought by the promisor in exchange for his promise and

is given by the promisee in exchange for that promise.”).

paid on both sides

705

doctrine was related to any form of reciprocity, it was to quid pro quo exchange.

Nevertheless, if it is a commonplace that the line drawn by the doctrine of con-

sideration is drawn around exchange, it is, I believe, one that has not been su-

ciently borne in mind by those pursuing either positive or normative analysis. As

I will show, many of the well-known diculties that have become associated

with the doctrine are due to a failure to reckon with the notion of exchange that

lies at the core of the rule.

The modern understanding of the consideration requirement may largely be

traced to the deﬁnition of consideration put forth by Christopher Columbus

Langdell in 1879 in the summary appended to the second edition of his famous

26. Although his view is not widely accepted—for some prominent dissents, see generally BAKER,

ENGLISH LEGAL HISTORY, supra note 2; IBBETSON, A HISTORICAL INTRODUCTION, supra note 2;

Baker, Origins of Consideration, supra note 2; and Ibbetson, Consideration and the Theory of Con-

tract, supra note 2—Simpson has argued at length that the requirement of consideration, prior

to the late nineteenth century, had little to do with reciprocit y at all, but was rather a means

of ensuring that the law would enforce only those promises made for “good reasons”—to en-

sure, in other words, that the considerations which motivate enforceable promises are in some

sense worthy. In so arguing, Simpson expressly sets himself in opposition to the “bargain

theory” that he attributes to Holmes’s followers, who are accused of “link[ing] their theories

about the modern law to their account of the history of the subject.” SIMPSON, supra note 2, at

417 n.1.

27. This is not to suggest that no one has recognized the importance, for the study of the law of

consideration, of providing such an account of exchange. In his seminal paper Consideration

and Form, Lon Fuller observes that

[i]n the executory bilateral contract . . . the element of exchange stands largely

alone as a basis of liability and its deﬁnition becomes crucial. Various deﬁnitions

are possible. . . . The problem of choosing among these varying conceptions may

seem remote and unimportant, yet it underlies some of the most familiar problems

of contract law.

Fuller, supra note 17, at 817 (footnote omitted). Unfortunately, while recognizing the problem,

Fuller makes no serious eort to provide an analysis of the pivotal concept. The “[v]arious

deﬁnitions” he canvasses are marked by their vagueness an d imprecision, and Fuller unfortu-

nately makes no attempt to improve upon them:

We may deﬁne exchange vaguely as a transaction from which each participant de-

rives a beneﬁt, or, more restrictively, as a transaction in which the motives of the

parties are primarily economic rather than sentimental. Following Adam Smith, we

may say that it is a transaction which, directly or indirectly, conduces to the division

of labor. Or we may take Demogue’s notion that the most important characteristic

of exchange is that it is a situation in which the interests of the transacting parties

are opposed, so that the social utility of the contract is guaranteed in some degree

by the fact that it emerges as a compromise of those conﬂicting interests.

Id.

the yale law journal 129:690 2020

706

casebook: “T he consideration of a promise is a thing given or done by the prom-

isee in exchange for the promise.”

According to this deﬁnition, which remains

the textbook formulation to this day, the consideration that supports a promise

(consideration that is comprised of the promisee’s performance, when the con-

tract is unilateral, and the promisee’s counterpromise, when bilateral) stands,

necessarily and in all cases, in an exchange relation to the promise itself.

Lang-

dell’s deﬁnition quickly took root in the legal establishment, and by 1899, James

Barr Ames, Langdell’s successor as dean of Harvard Law School, could correctly

assert in the pages of the Harvard Law Review that “[E]veryone will concede that

the consideration for every promise must be some act [including a counter-

promise] or forbearance given in exchange for the promise.”

And yet, despite this reception, there is surprisingly little precedent for Lang-

dell’s deﬁnition of co nsideration, either in case law or secondary sources on ei-

ther side of the Atlantic.

More importantly, and quite apart from the historical

28. LANGDELL, supra note 3, at 1011.

29. I am helping myself to the traditional distinction between unilateral and bilateral contracts,

even though the Second Restatement has abandoned these terms on account of “doubt as to

the utility of the distinction.” RESTATEMENT (SECOND) OF CONTRACTS § 1, reporter’s note to

cmt. f. As Farnswo rth observes, “[E]ven the Restatement Second recognizes that an oeror

may make an oer that ‘invites an oeree to accept by rende r ing a performance and does not

invite a promissory acceptance.’” FARNSWORTH, supra note 4, § 3.4, at 206 (quoting RESTATE-

MENT (SECOND) OF CONTRACTS § 45). I will follow Farnsworth and use the term “unilateral

contracts” to refer to those that are formed by such nonpromissory acceptances, and “bilateral

contracts” to refer to those formed by promissory acceptances.

30. Ames, Bilateral Contracts, supra note 15, at 31.

31. Williston, although an early champion of Langdell’s deﬁnition, acknowledged its uncertain

relation to the history of the doctrine: “No doubt, during its development consideration

meant something more or dierent tha n something given by the promisee in exchange for the

promise, but that is the end to which it gradually tended, and which it now may be held to

have reached.” Samuel Williston, Successive Promises of the Same Performance, 8 HARV. L. REV.

27, 33 (1894).

It is crucial to avoid being misled by those earlier deﬁnitions that identify consideration

with the causa or cause of the civil law. For example, Powell, who frankly acknowledged in his

note to the reader that “many of the observations and general remarks here submitted for [the

reader’s] consideration, have been taken . . . from the civil law writ ers,” 1 JOHN JOSEPH POW-

ELL, ESSAY UPON THE LAW OF CONTRACTS AND AGREEMENTS, at xii (London, J. Johnston & T.

Whieldon 1790), deﬁnes consideration as “the material cause of a contract or agreement; or

that, in expectation of which, each party is induced to give his assent to what is stipulated

reciprocally between both partie s,” id. at 330. While the posited motivational relation is a re-

lation between the consideration and the promise, there is no reason to interpret this relation

as a relation of quid pro quo exchange. As Pollock and other bargain theorists of consideration

have pointed out, the civilian causa (or cause) embraces many kinds of gratuitous agreements.

FREDERICK POLLOCK, PRINCIPLES OF CONTRACT AT LAW AND IN EQUITY 118-19 (London, Ste-

vens & Sons 1st ed. 1876) (describing how, in Roman law, “[i]nformal agreements (pacta)

paid on both sides

707

did not give any right of action without the presence of something more than the mere fact of

the agreement. This something more was called causa. Practically the term covers a somewhat

wider ground than our ‘consideration executed’”); id. at 148 (explaining, in comparing con-

sideration with the modern French causa, that “nothing would at ﬁrst sight seem more natural

to an English lawyer than simply to translate cause by consideration. Butlet him turn to a French

commentary on the Code, and he ﬁnds no distinct and comprehensive deﬁnition of cause as a

legal term of art, but a scholastic discussion of ecient, ﬁnal, and impulsive causes. Going on

to see what is in fact included in the cause of the French law, we ﬁnd it wider than our Con-

sideration in one way and narrower in another. On the one hand the existence of a natural [i.e.

moral] obligation, or even of a real or supposed duty in point of honour only, may be quite

enough. Nay, the deliberate intention of conferring a gratuitous beneﬁt, where such intention

exists, is a sucient foundation for a binding unilateral promise.”).

The clearest historical antecedent to Langdell of which I am aware is in the opinion of

Eagan v. Call, 34 Pa. 236, 237 (1859) (“Want of consideration can only be, where the promissee

parts with nothing in exchange for the promise. The consideration fails, when the promissor

does not get that which the promissee agreed to give, as a motive for the promise.”) Three

points are in order. First, there is no evidence, as far as I know, that this deﬁnition had any

impact on the development of the law or on Langdell. (It is perhaps relevant that, somewhat

notoriously, the only cases included in Langdell’s casebook come from England, Massachu-

setts, and New York.) Second, assuming the second quoted sentence from Eagan is a refor-

mulation of the preceding one, it corroborates my argument, oered below, that Langdell’s

deﬁnition relies on a motivational conception of exchange. See infra text accompanying note

38. Third, Eagan concerned a sales case where payment was tendered using a bill. 34 Pa. at

236. As I discuss below, all accounts of exchange could agree that in a case like that it is the

promise (merged with the bill) that is given in exchange for the performance. See infra note

92 and accompanying text. Thus, although these sentences use general terms, it is possible

that the deﬁnition should be implicitly restricted to the facts of the case (i.e., that it should be

read, “want of consideration [in cases like this] can only be . . .”).

Finally, one must not be misled by the well-worn phrase, used to describe unexecuted

bilateral contracts, that “mutual promises are consideration for each other,” the proper import

of which was well captured by Henry Ballantine many years ago:

When the [contractual] action of assumpsit was ﬁrst introduced in the sixteenth

century, the only consideration recognized was an executed consideration, value ac-

tually given or detriment incurred. To extend the action to [wholly unexecuted]

bilateral contracts without appearance of change, it was said that “mutual promises

are consideration for each other,” and this became the language of pleading and of

the courts. But the courts have never stopped to analyze what they meant by “prom-

ise.” They simply meant that executory consideration was sucient. It is therefore

not necessary to take this loose and uncritical language of the judges and pleaders

literally. . . . Like many legal mottoes and catch phrases, the easy and time-honored

formula that promise is consideration for promise is but a legal “bromide,” which

is ordinarily used as a substitute for thought, to disguise a lack of analysis under

vague and specious words.

Henry Winthrop Ballantine,

Mutuality and Consideration, 28 HARV. L. REV. 121, 125-26 (1914).

Admittedly, there is one pocket of early English law—namely, the doctrine of independ-

ency as it related to the purely executory contract—that might conceivably be taken as prece-

dent for Langdell’s position, insofar as the cases explicating that doctrine appear to put to

the yale law journal 129:690 2020

708

question whether it constituted an innovation, Langdell’s deﬁnition is as a purely

conceptual matter in tension with the traditional common-law conception of

bargain or exchange as reciprocal remuneratio n (alternatively, recompense), a

conception that ﬁgures repeatedly in discussions of the do ctrine of consideration

from the sixt eent h century until Langdell’s deﬁnition took ro ot.

This tradi-

tional conception of bargain or exchange is well articulated by Edmund

Plowden, in what Frederick Pollock characterized as “the ﬁrst full discussion of

Consideration by that name,”

a case repo rt of Sharington v. Strotton.

Accord-

work the idea that mutual promises are given for one another. Here, too, though, there is con-

siderable room for doubt. Aer all, the doctrine regarding mutual promises may well have

resulted from a decision to extend to contract the relevant principles governing mutual cove-

nants rather than from a commitment to Langdell’s later conception of consideration. As S.J.

Stoljar explains,

[S]tarting with the principle that mutual covenants were independent unless ex-

press words of condition made one covenanted performance dependent upon, or

prior to, the other, the courts had no other method of construction . . . . The law

[of contracts] . . . took as its model not the sale by mutual grants where concur-

rency was the natural solution, but the mutual covenants for service where concur-

rent performance was impossible; the law followed the latter analogy because, ex-

ecutory agreements being by covenant, “covenant” thus appeared to map out the

area of relevant precedent.

S.J. Stoljar, Dependent and Independent Promises: A Study of the History of Contract, 2 S

YDNEY L.

REV. 217, 220-21 (1957). In any case, if the doctrine of independence indeed reﬂected an early

commitment to Langdell’s conception of consideration, the law’s subsequent movement away

from independency and toward concurrency can pe rhaps be conceived of as a move away from

that conception.

32. By way of contrast, three years before the publication of Langdell’s deﬁnition, in the ﬁrst edi-

tion of arguably the ﬁrst systemic treatise of the common law of contract, Frederick Pollock

approvingly quoted the deﬁnition of the Exchequer Chamber : “A valuable consideration, in

the sense of the law, may consist either in some right, interest, proﬁt, or beneﬁt accruing to

the one party, or some forbearance, detriment, loss, or responsibility, given, suered, or un-

dertaken by the other.” POLLOCK, supra note 31, at 147 (quoting Currie v. Misa (1875) 10 LR

Exch. 153 at 162 (Lush J)). While this has been correctly understood to express a bargain con-

ception of consideration, the deﬁnition neither says nor implies that the valuable considera-

tion stands in an exchange relation with the promise it supports (as opposed to the promised

performance). As I discuss below, Pollock does not adopt (a variant of) Langdell’s deﬁnition

until the 1881 edition of his treatise. See infra notes 153-155 and accompanying text. Similarly,

the deﬁnition of consideration given in the 1879 edition of Anson’s important treatise does

not say or imply that the bargained-for beneﬁt is given in exchange for the promise: “Consid-

eration [is] some gain to the party making the promise, arising from the act or forbe arance,

given or promised, of the promisee.” WILLIAM R. ANSON, PRINCIPLES OF THE ENGLISH LAW OF

CONTRACT 29 (Oxford, Clarendon Press 1879).

33. POLLOCK, supra note 31, at 151.

34. Sharington v. Strotton (1565) 75 Eng. Rep. 454; 1 Plowden 298.

paid on both sides

709

ing to Plowden, “a bargain . . . is, when a recompense is given by both the par-

ties, as if a man bargains his land for money, here the land is a recompense to the

one for the money, and the money is recompense to the other for the land, and

this is properly a bargain and sale.”

According to this deﬁ nition—advanced not

only by Plowden, but also by other preeminent authorities such as Christopher

St. German and William Blackstone—reciprocal transfers of goods or services

constitute a bargain or exchange just in case each transfer is viewed as payment

for the other.

This deﬁnition of exchange is incompatible with Langdell’s deﬁnition of

consideration. More precisely, if the promisee’s performance (in the unilateral

contract) or counterpromise (in the bilateral contract) stands always in an ex-

change relation to the promisor’s promise, then, if ordinary usage is any guide,

the exchange relation cannot be identiﬁed with the relation of reciprocal pay-

ment or remuneration.

This can be seen most easily by considering ordinary

sales contracts (an agreement to transfer goods for money), paradigm cases of

contracts with good consideration. Let us start with the unilateral case: a seller

of goods makes an oer to Jones to deliver certain goods if Jones pays the seller

35. Id. at 461; 1 Plowden at 303. Commenting on this deﬁnition, Simpson notes that “[t]hough

contemporaries did not call an agreement to build a house for money (for example) a bargain,

but a covenant, the same analysis will ﬁt such a transaction.” SIMPSON, supra note 2, at 416-

17. While Simpson recognizes that bargain or exchange agreements satisfy the sixteenth-cen-

tury consideration requirement, he nevertheless insists that the requirement can be satisﬁed

in other ways as well, and so concludes that consideration should not be characterized as a

doctrine that requires bargain as a condition of enforcement. See id. at 417-24.

36. 2 WILLIAM BLACKSTONE,COMMENTARIES *446 (“Sale or exchange is a transmutation of prop-

erty from one man to another, in consideration of some recompense in value: for there is no

sale without a recompense; there must be quid pro quo.”); cf. CHRISTOPHER ST. GERMAN,

DOCTOR AND STUDENT 228 (T.F.T. Plucknett & J.L. Barton eds., Selden Society 1974) (1530)

(“[S]uche bargaynes and sales be called contractes/ & be made by assent of the partyes vppon

agrement betwene theym of goodes or landes for money or for other recompence . . . .”). In

addition to identifying bargain or exchange with reciprocal recompense (i.e., payment), St.

German and Blackstone, in the same chapters, also treat consideration as equivalent with rec-

ompense. See 2BLACKSTONE, supra, at *441 (“[H]e did it without any consideration or recom-

pence . . . .”); id. at *444-45; ST. GERMAN, supra, at 228 (“[A] nude contracte is where a man

maketh a bargayne or sale of his goodes or landes wythout any recompence appoynted for yt.

As yf I saye to a nother I sell the all my lande or all my goodes & nothynge is assygned that

the other shall gyue or paye for yt/ that ys a nude contracte/ and as I take yt: it ys voyde in

the lawe and conscyence . . . .”).

37. On my use of the traditional distinction bet ween unilateral and bilateral contracts, see supra

note 29 and accompanying text. As discussed earlier, the modern consideration rule requires

that the promisor receive something in exchange for the promise, which implies that, in the

case of bilateral contracts, the relevant exchange relation is that between promise and counter-

promise (rather than promise and performance). For further discussion, see supra note 9.

the yale law journal 129:690 2020

710

ﬁy dollars. Jones pays the money and the goods are delivered as promised.

Now, we may ask, does Jones’s transfer of funds constitute remuneration for the

transfer of the goods or for the promise to transfer them? No one whose under-

standing has not been distorted by confused doctrines of consideration would

have any diculty answering that, in the usual case, the payment is fo r th e goods

and not the promise to give them. Since the payment, in this example, does, for

Langdell, constitute consideration for the promise, it follows, on pain of incon-

sistency, that Langdell’s deﬁnition relies on an alternative sense of exchange. The

same result is even more clearly reached in the case of ordinary bilateral sales

agreements. As long as the agreement remains unexecuted on both sides—that

is, before either the goods or the money has changed hands—no one who aims

to be speaking proper English would say that a payment (much less two of them)

has already been made merely on account of the handshake.

Although Langdell himself did not articulate the alternative conception of

exchange upon which he implicitly relied, strides were made the following year,

1880, in Oliver Wendell Holmes’s seminal lectures on the common law. Holmes

put forward a deﬁnition of consideration that purported to precisely specify the

relation between promise and consideration in terms of motivational concepts:

[I]t is the essence of a consideration, that, by the terms of the agreement,

it is given and accepted as the motive or inducement of the promise. Con-

versely, the promise must be made and accepted as the conventional mo-

tive or inducement for furnishing the consideration. The root of the

whole matter is the relation of reciprocal conventional inducement, each

for the other, between consideration and promise.

It is important to grasp the precise meaning of Holmes’s deﬁnition. X is a

“motive or inducement” for Y if X is done with the aim, though not necessarily

the sole or exclusive one, of producing Y; X and Y are reciprocal inducements if

each is done with the aim of producing the other.

In the terms of contract law’s

theory of oer and acceptance, an acceptance serves to bind the oeror and

thereby serves to transform the oer into a binding promise. Returning to the

38. As I have acknowledged, some may question the signiﬁcance of ordinary usa ge on these is-

sues. As I have discussed, such skepticism has little bearing on the overall claims of this article.

See supra note 11. In Part II, however, I oer a theory of reciprocal remuneration that vindicates

the ordinar y linguistic intuitions, thereby showing the incompatibility of Langdell’s deﬁni-

tion with a conception of consideration as reciprocal payment.

39. HOLMES, supra note 12, at 265. The lectures were delivered in the fall of 1880, and the contract

lectures were draed in the summer of 1880. See Patrick J. Kelle y, A Critical Analysi s of Holmes’s

Theory of Contract, 75 NOTRE DAME L. REV. 1681, 1682 (2000).

40. Instead of “with the aim of,” I could have written “as a means of” or “in order to.” These are

equivalent formulations.

paid on both sides

711

earlier example of the unilateral sale, in which the seller’s oer is accepted by

means of the buyer’s payment, the seller’s promise stands in a relation of recip-

rocal inducement to the payment if the oer is made in order to induce the pay-

ment and the payment is made with the aim of binding the seller. Likewise, in

the bilateral case, where the oer is accepted by the counterpromise, the oer

and acceptance stand in a relation of reciprocal inducement if each is made with

the aim of binding the other party to the deal.

Holmes’s deﬁnition of consideration does not require that the parties actu-

ally possess the motives that would satisfy a so -called subjective reciprocal-in-

ducement co ndition. One would instead expect, given his well-known views

about mental-state requirements in the law, a so-called objective construal of the

condition: that is, one would expect him to say that the promisor must merely

manifest the aim of inducing the consideration, while the promisee must merely

manifest the reciprocal aim of binding the promisor. But he does not say this;

rather, by invoking what Grant Gilmore has rightly called a “mysterious

phrase”

—that is, “reciprocal conventional inducement”—Holmes replaces an

objective motive requirement with a “conventiona l” one, which can be satisﬁed

by the “terms of the agreement” even when objective manifestations are absent.

It is clear from the context that Holmes avoided oering the objective construal

only to accommodate the traditional allowance for nominal consideration.

As-

suming, as Holmes did, that the al lowance was to follow from the deﬁnition of

consideration, some such accommodation was clearly necessary: when someone

“sells” their nephew the family farm for a dollar, it is abundantly manifest that

they do not hand over the keys (or commit to doing so) as a means of obtaining

the dollar (or the commitment to give it). Accordingly, for one who is prepared

either to disallow nominal consideration, or to recognize it as an exception to,

rather than a fulﬁllment of, the requirement of consideration, there would be no

reason to go beyond the objective construal of the requirement.

Although Holmes oers this motivational account of the relation between

promise and consideration, he stops just shy of explicitly identifying the relation

of “reciprocal conventional inducement” with the relation of exchange. How-

ever, in the previous lecture, he explicitly identiﬁed “our peculiar and most im-

portant doctrine . . . [of] consideration” with “the rule . . . that there must be

quid pro quo.”

It is, perhaps, possible that Holmes intended to put forward “re-

ciprocal conventional inducement” only as a sucien t condition of exchange,

41. GRANT GILMORE, THE DEATH OF CONTRACT 22 (Ronald K.L. Collins ed., 1995).

42. In the sentence immediately preceding the quoted deﬁnition, he says, “A consideration may

be given and accepted, in fact, solely for the purpose of making a promise binding.” HOLMES,

supra note 12, at 265.

43. Id. at 234; see also id. at 243 (“Wherever consideration was mentioned, it was as quid pro quo,

as what the contractor was to have for his contract.”).

the yale law journal 129:690 2020

712

and not as a complete analysis. However, this possibility is remote enough that

we may safely say that Holmes’s theory of consideration is an application of a

general theory of quid pro quo exchange. This interpretation gains further sup-

port from, ﬁrst, its hand-in- glove ﬁt with Langdell’s deﬁnition of considera-

tion—it supplies the deﬁnition of “exchange” that appears to substantiate Lang-

dell’s view of the matter—and, second, the air of plausibility that reciprocal

inducement enjoys as a theory of quid pro quo exchange. Aer all, when parties

sell or trade goods or services, it is at least usually the case that each gives (partly)

in order to receive, or at least appears to do so. And, in any case, even if Holmes

stopped just short of explicitly identifying the relation of “reciprocal conven-

tional inducement” with the exchange relation, the draers of the Second Re-

statement had no such qualms. Putting two and two together, they both adopted

Langdell’s deﬁnition of consideration, cast in terms of exchange, and repackaged

Holmes’s motivational deﬁnition of consideration as a deﬁnition of exchange.

This was made fully explicit in the comments:

Consideration requires that a performance or return promise be “bar-

gained for” in exchange for a promise; this means that the promisor must

manifest an intention to induce the performanc e or return promise and

to be induced by it, and that the promisee must manifest an intention to

induce the making of the promise and to be induced by it.

44. They employed the objective rather than conventional variant of reciprocal inducement, re-

ﬂecting their reversal on nominal consideration.

45. REST ATEMENT (SECOND) OF CONTRACTS § 81 cmt. a (AM. LAW INST. 1981). For an especially

full-throated statement of the Holmesian theory, see RESTATEMENT (SECOND) OF CONTRACTS

§ 75 cmt. b (AM. LAW INST., Preliminary Dra No. 2, 1961) (“‘Bargained for and given in

exchange.’ In the typical bargain, the consideration and the promise bear a reciprocal relation

of motive or inducement: the consideration induces the making of the promise and the prom-

ise induces the furnishing of the consideration. Here, as in the matter of mutual assent, the

law is concerned with the external manifestation rather than the undisclosed mental state: it

is enough that one party manifests an intention to induce the other’s response and to be in-

duced by it and that the other responds in accordance with the inducement. . . . But it is not

enough that the promise induces the conduct of the promisee or that the conduct of the prom-

isee induces the making of the promise; both elements must be present, or there is no bar-

gain.”). The story of what happened between Holmes’s seminal lectures and the Second Re-

statement’s adoption of his deﬁnition is an interesting one involving the Holmesian theory of

exchange “working itself pure.” The simpliﬁed version is that Williston, the chief Reporter of

the First Restatement, wanted to have it both ways, holding both that consideration is always

given in exchange for the promise and that the exchange relation is a relation of reciprocal

payment. That he was serious about the latter proposition is clear not only from his repeated

statements that consideration is the “price” or “payment” of the promise; more importantly,

he had a good enough grip on the concept of payment to use it to explain, as we shall see in

Part III, the unenforceability of informal social and domestic arrangements that plainly satisfy

paid on both sides

713

In a well-kno wn discussion, Gilmore called Holmes’s “bargain theory” of

consideration “revolutionary doctrine” and maintained that in propounding it

Holmes “was not in the least interested in stating or restating the common law

as it was.”

Yet Gilmore did not capture the nature of the revolution he set out

to describe. If he was referring merely to a new technical deﬁnition of a consid-

eration requirement cast in the terms of reciprocal inducement, then his claims

were overstated, as this alone hardly amounts to “a revolutionary change in legal

thought.”

If, alternatively, he was suggesting that, in Holmes’s hands, the con-

sideration doctrine came to embody, for the ﬁrst time, a requirement of bargain,

he faces the powerful arguments to the contrary oered by some of our most

distinguished historians of the common law, such as J.H. Baker, D.J. Ibbetson

and others. What truly did amount to a revolutionary change in legal thought,

however, was the silent substitution of one conception of bargain or exchange

for another, a revolution so silent that it has evaded detection by historians of

even Baker’s and Ibbetson’s stature, who have, I believe, read Langdell’s concep-

tion back into the older sources.

And this “new day dawned” not “with

reciprocal inducement. See infra notes 133-135 and accompanying text. The story of these in-

tervening years also involves the rise and fall of the “beneﬁt-detriment” requirement, con-

ceived of as an independent requirement that serves to supplement the exchange requirement.

Although I will not argue the point here, this too should be seen as the natural culmination of

Holmesian theory of exchange. In thislight it is signiﬁcant, and unsurprising, that the beneﬁt-

detriment rule met its demise in a 1918 Corbin paper, see Arthur L. Corbin, Does a Pre-Existing

Duty Defeat Consideration?—Recent Noteworthy Decisions, 27 YALE L.J. 362 (1918), and was ex-

plicitly negated in the Second Restatement, see RESTATEMENT (SECOND) OF CONTRACTS § 79

cmt. a (AM. LAW INST. 1981).

46. GILMORE, supra note 41, at 22.

47. Id. at 122 n.36 (quoting 2 MARK DEWOLFE HOWE, JUSTICE OLIVER WENDELL HOLMES: THE

PROVING YEARS: 1870-1882, at 245 (1963)).

48. In saying this, I am not relying on the more general claim that Langdell’s deﬁ nition marked

an innovation. Rather, my present claim is the narrower one that some of our best historians

have read Langdell’s deﬁnition of consideration (a deﬁnition that characterizes consideration

as that which is given in exchange for the promise) into particular earlier sources that neithe r

said nor implied it. Thus, Baker oers the following gloss on a ﬁeenth-century report: “One

of the clerks of the King’s Bench actually described the payment for the promise as quid pro

quo.” Baker, Origins of Consideration, supra note 2, at 355. Baker cites to Simpson’s transcription,

which reads as follows: “BROWN (the second clerk): If a man prepays any sum of money

that a house be built for him etcetera and he does not do it, now he will have an action of

trespass on his case because the defendant has quid pro quo and so the plainti is damaged.

And this was privately denied to him, etc.” S

IMPSON, supra note 2, at 626. As far as I can see,

nothing in this quotation says or implies that the prepayment was payment for the promise

and not the house. Moreover, Baker’s general descriptions of sixteenth-century developments

bear the same marks of Langdell’s inﬂuence: “Consideration, like cause, was a conveniently

ambiguous word to choose for the purpose. On the one hand, the consideration for a promise

could mean that which was given in return for it . . . .” BAKER, ENGLISH LEGAL HISTORY, supra

the yale law journal 129:690 2020

714

Holmes,” but with Langdell, and culminated in the work of Arthur Corbin an d

the Second Restatement Reporters.

All revolutions have their casualties. In this

case, as I will show in Part III, the casualty was nothing less than the intelligibil-

ity of the doctrine of consideration. Armed with an account of exchange that es-

chews Holmes’s motivational focus and instead analyzes the notion of payment

central to the older deﬁnition of bargain, we will be in a position to take up, also

in Part III, the constructive task of fo rmulating a new doctrine of consideration.

The revised doctrine will allow us to place the consideration requirement in its

best light by ascribing to it a rationale that is both intelligible and historically

compelling, and to avoid the unfortunate doctrinal results associated with the

prevailing theory. Before reaching these doctrinal issues, however, we must con-

sider and evaluate the alternative theories of exchange on their own terms. In

note 2, at 361 (emphasis added). As far as I can discern, none of the sources he goes on to

discuss in the passage justiﬁes the choice to use this variant of the Langdellian formula in a

general characterization of sixteenth-century law. Similarly, in summarizing his defense of the

bargain theory as a historical theory of consideration, Ibbetson writes that “[i]n developed

law [of the sixteenth century and beyond] the idea behind . . . consideration was . . . the prin-

ciple of mutuality: A’s promise had been given in exchange for the performance of some act

by B,” adopting Langdell’s formula even when no single source quoted in that article com-

pelled him to do so. Ibbetson, Consideration and the Theory of Contract, supra note 2, at 69.

Likewise, in his important book on the history of the law of obligations, Ibbetson remarks, in

the context of a discussion of Lord Gilbert’s early eighteenth-century contracts treatise, that

“[Gilbert] gave ‘consideration’ its orthodox [c]ommon-law meaning of something given in

exchange for the promise.” I

BBETSON, A HISTORICAL INTRODUCTION, supra note 2, at 237. Alt-

hough Ibbetson once again invokes the Langdellian formula, Gilbert’s treatise does not quite

have the meaning he ascribes to it. The deﬁnition referred to states that “consideration is de-

ﬁned by the lawyers [to be] a cause or occasion meritorious that requires a mutual recompence

in fact or in law.” 1 Lord Chief Baron Gilbert, A Collection of Manuscript Law Tracts 77 (early

18th century) (British Library Hargrave MS No. 265 fol. 40r) (scanned copy on ﬁle with au-

thor). It is not just that this deﬁnition neither says nor implies that consideration stands in an

exchange relation to the promise it supports; more signiﬁcantly, Gilbert’s deﬁnition is cast in

the traditional terms of reciprocal remuneration that, as a purely conceptual matter, are at

odds with Langdell’s formulation. I am grateful to Michael Lobban and David Ibbetson for

their help in researching this matter. Gilbert’s formulation also appears in J

OHN DODERIDGE,

THE ENGLISH LAWYER 131 (photo. reprt. 2005) (London, Assigns of I. More 1631). Finally,

even Simpson, who bases many of his arguments against the bargain theory on the claim that

certain enforceable promises can’t be construed as promises to remunerate, occasionally slips

into the Langdellian mode: “By recognizing the rule that a promise was enforceable if given in

return for [money] payment or some other recompense the common law came to enforce bargains—

two-sided agreements in which performance by one party is paid for by the other party, and

vice versa. In such bargains things of value are exchanged—land for money, chattels for

money, services for money, and so forth.” SIMPSON, supra note 2, at 416 (emphasis added).

Simpson does not seem to recognize that the (italicized) Langdellian gloss is inconsistent with

the sentences that immediately follow, which go on to characterize the payment relation as

holding between the performances, rather than the promises to perform.

49. GILMORE, sup ra note 41, at 21.

paid on both sides

715

particular, if the history uncovered in this Part (a history of conceptual appro-

priation) teaches us anything, it is that it is not enough to deﬁne bargain or quid

pro quo in terms of reciprocal payment if the latter term is as in need of deﬁnition

as the former.

ii. quid pro quo exchange: a philosophical account

It is, in some ways, no surprise that the law of consideration has been tainted

by a failure to reckon with its leading concept, quid pro quo exchange. For de-

spite its immense practical and theoretical signiﬁcance, quid pro quo exchange

is perha ps the least understood of the most basic modes of human interaction.

To be sure, it can hardly be doubted that exchange involves the mutual provision

of goods or services among discrete individuals or groups. Yet the bilateral per-

formance of ostensibly desired services no more establishes that an exchange has

occurred (rather than a pair of good turns, say) than does the utterance of a sen-

tence in the indicative mood establish that an assertion has been made (rather

than a guess or a joke, say). And while one who wishes to understand what en-

dows an utterance with assertoric force has recourse to a vast philosophical liter-

ature, the determinants of exchange, over and above the bilateral provision of

goods or services, remai n shrouded in darkness. As with the speech act, we may

expect individual motives, shared understandings, and normative practices to

50. Although I have just observed the incompatibility between the notion of reciprocal payment

and the sense of “exchange” that ﬁgures in Langdell’s deﬁnition, one may reasonably wonder

whether there are any other candidates, besides reciprocal inducement, that might ﬁt the

Langdellian bill. The challenge is to identify some other sense of “exchange” that holds both

between promise and counterpromise and between the ensuing performances in the typical

bilateral sales contract, as no one would wish to deny that the money and th e goods typically

stand in an exchange relation. (Williston makes this explicit. See infra note 66.) The recipro-

cal-inducement theory of exchange, as I will develop it in Part II, meets this criterion, which

is precisely what makes it such a good companion for Langdell’s deﬁ nition. I may further note

that an otherwise tempting “I will if you will” account of exchange—speciﬁcally, one that

identiﬁes two acts as standing in an exchange relation just in case they together fulﬁll an “I

will if you will” agreement—does not seem to meet the stated criterion, since it would not

seem to apply to the relation between the commitments themselves in the typical case. Nev-

ertheless, since some might be attracted to such an “I will if you will” theory of exchange

irrespective of its compatibility with Langdell’s deﬁnition, I will note here, and again in Part

II (where relevant), that several of the counterexamples that I will put forward against recip-

rocal inducement are also eective against the “I will if you will” theory of exchange. Finally,

it is noteworthy that an “I will if you will” theory of exchange, unlike both the reciprocal-

inducement and reciprocal-payment theories, cannot explain the conceptual connection be-

tween exchange and instrumental motivation.

the yale law journal 129:690 2020

716

ﬁgure cen tra lly in an account of exchange. Yet the contents of these motives, un-

derstandings, and practices, as well as their conﬁguration in an explanation of

the transactional form, remain utterly obscure.

If the exchange form has received less than its due from philosophers, it is

not because it is lacking in either practical or theoretical signiﬁcance. In the prac-

tical realm, legal and social norms lean heavily on the concept of exchange. It is

not just the doctrine of consideration; in the United States, at the time of this

writing, legal rules governing situations as varied as the receipt of beneﬁts by

public ocials,

the regulation of campaign contributions,

the recourse of vic-

tims of the or fraud to the assets of the perpetrators ahead of co mpeting credi-

tors,

the deduction of taxable income,

and even the trading of ﬁnancial secu-

rities on the basis of insi de information

all prominently invoke the notion of

exchange, such that legal outcomes frequently turn on whether or not something

was done or given in exchange for something else. Additionally, most legal re-

gimes in the world, including both common- and civil-law regimes, deﬁne “gi”

51. One of the only discussions of exchange—certainly the most interesting and signiﬁcant—in

contemporary Anglophone philosophy is A.J. Julius’s The Possibility of Exchange, 12 POL. PHIL.

& ECON. 361 (2013). However, the closest Julius comes to a general characterization of the

exchange form is his claim that exchange is “a pair of services each performed because its

author takes it to bear some important relation to the other.” Id. at 365. Moreover, in my view,

the ﬁnal sections of that paper ought to be recharacterized: Julius’s hopeful appeal to joint

agency is better seen, not as a form of morally legitimate exchange, but rather as a proposal

for how we can get some of the same beneﬁts of exchange through other (less problematic,

by his lights) modes of collaboration. See id. at 369-72.

52. McDonnell v. United States, 136 S. Ct. 2355, 2372 (2016) (“Section 201 prohibits quid pro quo

corruption—the exchange of a thing of value for an ‘ocial act.’”).

53. Citizens United v. FEC, 558 U.S. 310, 359 (2010) (“When Buckley identiﬁed a suciently im-

portant governmental interest in preventing corruption or the appearance of corruption, that

interest was limited to quid pro quo corruption.” (citing McConnell v. FEC, 540 U.S. 93, 296-

98 (2003) (Kennedy, J., concurring in the judgment in part and dissenting in part with respect

to BCRA Titles I and II))).

54. RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT § 58 cmt. a (AM. LAW

INST. 2011) (“Subsections (1) and (2) describe features of the common law of property that

yield the transitivity of ownership rights. If A has a right to restitution of X in the hands of B,

and B obtains Y in exchange for X, A has the same rights in the substitute as in the original.”).

55. Comm’r v. Duberstein, 363 U.S. 278, 285 (1960) (“[W]here the payment is in return for ser-

vices rendered, it is irrelevant that the donor derives no economic beneﬁt from it.” (quoting

Robertson v. United States, 343 U.S. 711, 714 (1952)).

56. Salman v. United States, 137 S. Ct. 420, 423 (2016) (describing how insider trading liability

may be found “where the tipper receives something of value in exchange for the tip”); Dirks

v. SEC, 463 U.S. 646, 664 (1983) (holding that a breach of duty may be inferred from “a

relationship between the insider and the recipient that suggests a quid pro quo from the lat-

ter”).

paid on both sides

717

partly in terms of quid pro quo, lending conceptual priority to the latter. This is

typically achieved by a requirement of gratuitousness, which is in turn usually

deﬁned as a lack of quid pro quo or consideration.

Similarly, because widely

held social norms make the proper deployment of the exchange form to a con-

siderable degree dependent on social context, the choice of whether to deploy

the form is oen used as an opportunity to clarify the context. For example, in

the context of friendship (and also philanthropy) we oen take pains to resist

characterizing even our reciprocated services in exchange terms, while commer-

cial actors who want to establish their arm’s length relationships oen take pains

to do the opposite.

In the realm of theory, exchange ﬁgures explicitly in the standard textbook

deﬁnitions of two of the most important concepts for socioeconomic theorizing:

market and commodity. Debra Satz aims to capture the common understanding

when she characterizes markets as “institutions in which exchanges take place be-

tween parties who voluntarily undertake them.”

And as Friedrich Engels fa-

mously wrote, “[T]o become a commodity, the product must be transferred to

57. See RICHARD HYLAND, GIFTS: A STUDY IN COMPARATIVE LAW 129-32 (2009). I am indebted to

Hyland’s monumental work, but would like to register a minor, but important, quibble with

his suggestion that the anthropological deﬁnition of gi is dierent from the legal one. More

speciﬁcally, he says that if the law were to have adopted the anthropological deﬁnition it may

have deﬁned gi as “the transfer of an object in the context of a relationship that implies ob-

ligations to give, to receive, and to reciprocate.” Id. at 128. He is of course referring to Marcel

Mauss’s classic work, but Mauss is clear that he was describing a conceptual scheme that

didn’t dierentiate, as ours does, between the notions of gi and quid pro quo exchange. In

other words, notwithstanding the title of his work, Mauss is admirably clear, as we would put

it today, that the practices he describes do not reﬂect a dierent conception of our concept of

gi, but rather a dierent concept altogether. See M

ARCEL MAUSS, THE GIFT: THE FORM AND

REASON FOR EXCHANGE IN ARCHAIC SOCIETIES 93 (W.D. Halls trans., Routledge Classics

2002) (1950) (“The terms that we have used—present and gi—are not themselv es entirely

exact. We shall, however, ﬁnd no others. [The] concepts of law and economics that it pleases

us to contrast . . . it would be good to put them into the melting pot once more. We can only

give the merest indications on this subject. Let us choose, for example, the Trobriand Islands.

There they still have a complex notion that inspires all the economic acts we have described.

Yet this notion is neither that of the free, purely gratuitous rendering of . . . services, nor that

of production and exchange purely interested in what is useful. It is a sort of hybrid that ﬂour-

ished.”).

58. DEBRA SATZ, WHY SOME THINGS SHOULD NOT BE FOR SALE: THE MORAL LIMITS OF MARKETS

15 (2010) (emphasis added) (citing Samuel Bowles, What Markets Can—and Cannot—Do,

CHALLENGE, July/Aug. 1991, at 11). Deﬁning markets in terms of exchange is prevalent. See,

e.g., JASON BRENNAN & PETER M.JAWORSKI,MARKETS WITHOUT LIMITS: MORAL VIRTUES AND

COMMERCIAL INTERESTS 4 (2016) (“A market is a relationship where the mode of interaction

is consensual exchange. Broadly speaking, a market is the voluntar y exchange of goods and

services for valuable consideration.” (footnote omitted)).

the yale law journal 129:690 2020

718

the other person, for whom it serves as a use-value, through the medium of ex-

change.”

And yet the concept of exchange itself has received practically no at-

tention from th eorists working on these topics, an omission that has not only

rendered our theoretical grasp of markets and commodities deﬁcient, but th at

has also stood in the way of eorts to settle the normative question of whether

or not certain goods and services ought to be for sale. In particular, while partic-

ipants in debates about market structures—either writ large or concern ing the

commodiﬁcation of speciﬁc, controversial goods and services—oen take for

granted a close connection between exchange and instrumental motivation, the

nature of the relation is never articulated or clariﬁed, and certainly never argued

for, making it dicult to determine whether certain objections presuppose fea-

tures of exchange that are merely contingent aspects of contemporary markets,

or whether the objections run deeper.

Thus, notwithstanding its great theoretical and practical signiﬁcance, it re-

mains obscure what it takes to subsume two performances under the exchange

concept such that we may truly say of each that it was done in exchange for the

other. In what follows, I will ﬁll this gap by providing an account of quid pro

quo exchange that seeks to characterize the relation between the two perfor-

mances (or, in other words, that seeks to elucidate the middle term of the quid

pro quo formula). On this view, quid pro quo is a normative concept that makes

essential appeal to the notion of debt. In brief, acts stand in an exchange relation,

according to this account, when the parties regard those acts as satisfying two

conditions

: ﬁrst, that each satisﬁes the debt incurred by the other, and, second,

that aer the sequence of acts neither party shall owe the other anything on ac-

count of the other’s act. That is, two acts constitute an exchange when it belongs

to the mutual understanding of the parties that they will each be “all paid up” as

far as those acts are concerned once they are completed. I will call the ﬁrst con-

dition “Reciprocal Debt Satisfaction,” and the second condition “No Residue.”

59. 1 KARL MARX, CAPITAL 131 (Ben Fowkes trans., Penguin Classics 1990) (1867) (deﬁnition in-

serted by Engels).

60. For recent criticism of markets (whether markets generally, or only in speciﬁc goods) that

emphasizes the role of instrumental motives in exchange, see especially ELIZABETH ANDER-

SON, VALUE IN ETHICS AND ECONOMICS (1993); G.A. COHEN, WHY NOT SOCIALISM? (2009);

and MICHAEL J. SANDEL, WHAT MONEY CAN’T BUY: THE MORAL LIMITS OF MARKETS (2012).

Brennan and Jaworski base their defense of markets on the contingency of certain of the ob -

jectionable features of markets, but rest their case partly on the testimony of historical anthro-

pologists rather than on a philosophical account of exchange. BRENNAN & JAWORSKI, supra

note 58.

61. Once again, I am here using “acts” in its broad sense to refer to courses of conduct that might

consist of some combination of acts or omissions. I will dispense with this disclaimer hence-

forth, allowing context to clarify when this sense is intended.

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719

These conditions are individually necessary and jointly sucient for the relation

of reciprocal remuneration, the traditional conception of a bargain . The appeal

to debt in the ﬁrst condition supplies me with motive and opportunity to provide

an account of that most interesting species of obligation, every bit as important

and neglected as exchange itself. Although the signiﬁcance of debt obligations

transcends the narrower context of exchange, it is, I believe, our failure to come

to terms with the former that has stood in the way of an adequate understanding

of the latter.

Although this account is chieﬂy motivated by the counterexamples to com-

peting theories, it is reinforced and illuminated by a particular genealogical ex-

planation, elaborated elsewhere at greater length,

that sees the quid pro quo

exchange form as an attempt to provide a practical solution to a practical prob-

lem. I am not the ﬁrst to explain the exchange form by appeal to a problem it

was in some sense designed to solve. David Hume and Adam Smith, for exam-

ple, employed a similar strateg y.

For these thinkers of the Scottish Enlighten-

ment, exchange solves the problem of how to extract services from nonintimates

who, bere of the care and concern that might other wise provide a motive, lack

sucient incentive to li a ﬁnger. Quid pro quo exchange solves this problem by

furnishing others with an incentive to serve—namely, by sweetening the deal—

and it is this function that, on the Scottish Enlightenment conception, explains

its features.

Although it is of course true that we commonly resort to oers of

exchange to extract services from those who require an incentive, this is not par-

ticularly illuminating as an explanation of the distinctive features of the exchange

form. For one thing, we may oen care a great deal about the fates of people who

lie beyond our narrow circle and yet reasonably insist on getting something in

exchange for our services to them. More importantly, quid pro quo exchange is

hardly distinctive in being a form or norm of reciprocity that can be used, given

the right circumstances, to extract services from those who are not disposed to

help out of aection for the beneﬁciary or other benevolent motives. As I have

noted, quid pro quo exchange is a distinctive species of reciprocity, an d it is

62. Jed Lewinsohn, Quid Pro Quo: A Theory of Exchange (Nov. 2019) (unpublished manuscript)

(on ﬁle with author).

63. See DAVID HUME, A TREATISE OF HUMAN NATURE 331-37(David Fate Norton & Mary J. Norton

eds., Oxford Univ. Press 2000) (1739-40); ADAM SMITH, AN INQUIRY INTO THE NATURE AND

CAUSES OF THE WEALTH OF NATIONS 14-15 (Edwin Cannan ed., The Modern Library 1994)

(1776).

64. See HUME, supra note 63; SMITH, supra note 63, at 15 (“Whoever oers to another a bargain of

any kind, proposes to do this. Give me that which I want, and you shall have this which you

want, is the meaning of every such oer; and it is in this manner that we obtain from one

another the far greater part of those good oces which we stand in need of.”).

the yale law journal 129:690 2020

720

hardly the only one that can be used to help elicit favors from self-interested

strangers—a fact made vivid by the distinctive intertribal transactional practices

brought to light by Marcel Mauss, as well as by the manifestly nonaltruistic, yet

occasionally eective, adoption of tit-for-tat policies in certain iterated game sce-

narios.

While the problem singled out by Hume’s and Smith’s accounts does not

illuminate the distinctive nature of quid pro quo exchange, there is another prob-

lem that does. This problem, which is not only solved by exchange but also ex-

plains its distinctive features, is that of facilitating the giving and taking of ben-

eﬁcial services without incurring lasting bonds and responsibilities—duties that

might otherwise be generated if services were provided gratuitously. In this view,

it is the applicability of expressions such as “we’re good” or “we’re done” in the

wake of the performances that is the hallmark of exchange, not the inducement

of services from those who are indierent to our wishes or welfare. This function

explains, most obviously, the signiﬁcance of the second condition of the account,

No Residue, as that condition explicitly states, as an element required if the par-

ties’ understanding is to constitute an exchange agreement, that in the aermath

of both performances there will be no remaining obligations owing to either per-

formance. It also sheds light on the ﬁrst condition, Reciprocal Debt Satisfaction,

for when services are rendered in the course of an exchange, the debts of grati-

tude that otherwise might arise if the services had been gratuitously rendered are

displaced by payment obligations that are reciprocally satisﬁed.

A. The Motivational Theory of Exchange: A Critique

Before introducing and defending the remuneration theory of exchange, I

will consider and reject the reciprocal-inducement alternative. As we have seen,

the prevailing doctrinal orthodoxy (reﬂected in the Second Restatement) ap-

peals to the reciprocal-inducement theory of exchange as the basis of the recip-

rocal-inducement account of consideration: if a pro mise must stand in an ex-

change relation to the promisee’s act (whether counterpromise or performance),

and the exchange relation is equivalent to the relation of reciprocal inducement,

then it follows that the promise must stand in the relation of reciprocal induce-

ment to the promisee’s act. Thus, while I will, in the next Part, oer reasons to

reject reciprocal inducement as a theory of consideration on grounds of justiﬁ-

cation and ﬁt, this Section’s rejection of reciprocal inducement as a theory of

exchange will serve to undermine the textbook derivation of the corresponding

theory of consideration.

65. See ROBERT AXELROD, THE EVOLUTION OF COOPERATION (2d ed. 2006); MAUSS, supra note 57.

paid on both sides

721

I will ﬁrst state the motivational theory in its strongest form by reﬁning a

rudimentary but intuitive formulation into a more sophisticated and plausible

one. According to the simplest version, B’s act X and A’s act Y stand in a quid

pro quo relation if each is done with the aim—at least the partial aim, as there

may be other motivating reasons too—of bringing about the other. Note that this

simpliﬁed deﬁnition is subjective, in the sense that satisfying it requires actually

possessing the relevant motives. The ﬁrst modiﬁcation will be to recast the con-

dition objectively—to require the manifestation, rather than the possession, of

the motives in question. The reason to prefer the objective version is simply that

it better accords with our intuitions about the cases. No one would deny that in

an ordinary sale of goods for money, the transfer of the goods and payment of

the money stand in a quid pro quo relation.

And yet it is not dicult to conjure

cases where the actual presence of the relevant motives is lacking. For example,

B might order something from A’s store solely because she knows A could use

the mon ey and will not accept handouts. In this case, the delivery of the goods

(goods that B disposes of as soon as they arrive) is a side eect, not an aim, of

B’s transfer of the money. If the goods had gotten lost in the mail, none of B’s

aims would have been frustrated. Hence the modiﬁcation to an objective formu-

lation.

To motivate the second modiﬁcation, let us consider bilateral sales agree-

ments that specify, as they oen do, the sequence of performances (such as pay-

ment upon delivery). Supposing that performance X (delivery of the goods)

comes before performance Y (payment of the money), we cannot say that the

latter was done in order to bring about the former. Aer all, the goods had al-

ready been received by the time payment was tendered. It is not dicult to mod-

ify the theory in light of such cases; the key is to realize that although Y was not

done with the aim of bringing about X, it was done knowingly in fulﬁllment of

66. Even Williston—whose dual commitments to Langdell’s deﬁ nition of consideration and the

remuneration conception of exchange led him to the tortured position that each promise in a

bilateral sales contract is payment for the other—did not deny that the fulﬁllments of those

promises also typically stand in payment relations to each other:

Doubtless it is almost universally true that the performance promised by one party

to a bilateral agreement is intended as the consideration for the pe rformance on the

other side. A double exchange is contemplated. Promise is the price or exchange for

promise and later performance for performance, but this is not always true.

Samuel Williston, Consideration in Bilateral Contracts, 27 HARV. L. REV. 503, 504 n.2 (1914).

Williston’s caveat is designed to accommodate those contracts, such as insurance or surety

contracts, in which a party will be called upon to perform only given some further condition

that may not come to pass. See id. (“If A. promises B. to guarantee a debt of one hundred

dollars due B. from X. in return for B.’s promise to A. to guarantee payment of ﬁve hundred

dollars due A. from Y., the performances are in no sense in exchange for one another, or the

consideration of one another, and yet there is a contract.”); see also infra note 92 and accom-

panying text.

the yale law journal 129:690 2020

722

an obligation that was itself assumed in order to bring about X. Accordingly, we

must say that act X stands in a relation of reciprocal inducement to act Y if each

is done with either the apparent aim of bringing about the other or (knowingly)

in fulﬁllment of a commitment which was itself undertaken with the apparent

aim of bringing about the other.

Further questions arise for the reciprocal-inducement theory of exchange,

most importantly whether it is a necessary condition of exchange that either or

both parties be (apparently) willing to perform only if they expect to get some-

thing in return. But we need not address this further question of whether a threat

to withhold performance unless payment is rendered is a necessary feature of an

exchange in order to oer decisive counterexamples to the theory. Indeed, the

theory provides neither necessary nor sucient conditions for quid pro quo ex-

change (with or without this extra condition). I will begin by cha llenging the

suciency claim, showing that the theory is too weak (in that it is overinclusive).

Consider, ﬁrst, the case of two individuals who are considering whether to

enlist in the armed forces. A and B are close friends, and each would rather enlist

in the army (enroll in the club, jump o the cli, etc.) than not enlist at all, pro-

vided that the other enlists as well; but each would also rather not enlist than enlist

if the other does not. In such circumstances, each might commit to enlisting so

long as the other does—a commitment manifested by a ﬁrm handshake aer a

series of “I will if you will” pronouncements. They execute the plan, and each

enlists. I assume that no one, least of all A and B, would say that their respective

enlistments constitute a quid pro quo—that is, were done in exchange for the

other. And yet the reciprocal-inducement conditions are plainly satisﬁed, as

would be the further condition that each would not have enlisted absent the ex-

pectation that the other would too.

For another important example, consider a loving aunt who, wishing to en-

courage her nephew’s growing interest in ﬁne art, oers to gi him thousands

of dollars provided that he promises to use the money to purchase art (and not

wine, diapers, or other things). The nephew accepts the generous oer by mak-

ing the promise, and the two proceed to follow through on their commitments:

the aunt transfers the money, and the nephew uses it to enhance his collection.

The question to consider is whether the conditions of reciprocal inducement

have been satisﬁed by what is patently a gi transaction. Now, there are certainly

cases where someone makes a conditional gi oer in the avowed hope that it

will be rejected. (For instance, “I’d prefer if you found someone else to help you;

however, I’ll do it if you want me to, so long as you promise to hold the ladder

while I’m up there.”) In such cases of reluctant gi oers, the oeror manif estly

lacks the aim of inducing acceptance. But there are also cases where a gi oer is

made eagerly—that is, with the hope and aim of getting the oeree to accept—

and we may suppose that the aunt’s promise to her nephew belongs to this class.

paid on both sides

723

More exactly, the aunt makes the promise with the aim of getting her nephew to

buy art, and goes on to transfer the money for the same reason (and also in ful-

ﬁllment of her promis e). Turning to the nephew, his purchase of the art is made

in fulﬁllment of a promise that was itself made with the aim of getting his aunt

to transfer the money. So the money transfer and the nephew’s purchase satisfy

the conditions of the reciprocal-inducement theory of exchange. And yet the ex-

ecution of this agreement does not involve a ba rgain or quid pro quo exchange

by ordinary lights, and thus the case serves as another counterexample revealing

reciprocal inducement to be too weak.

Turning to the necessity claim, the reciprocal-inducement theory of ex-

change is also too strong (in that it is underinclusive). A student looking for

bookshelves frequents a Vitra store to purchase the iconic midcentury design. He

makes several inquiries to the store manager, whose enthusiasm diminishes with

every question. Eyeing the student, he reaches the conclusion that the student is

unlikely to be able to aord the exorbitantly priced item. Allowing his annoyance

to get the better of him, he taunts the student, revealing his incredulity in explicit

terms. Indeed, the manager is so sure of the student’s modest ﬁnancial position

that he commits to selling the piece to the student at a signiﬁcantly discounted

rate, feeling certain that the student will be unable to purchase the item, even at

the lower rate, before the oer expires. As it happens, the student’s appearance

is not reﬂective of his ﬁnancial condition. Reaching into the pockets of his

(stained) pants, he produces the money and, with relish, accepts the oer. The

manager is bound and must deliver the shelves at the lower rate (even if it will

cost him his job). A sale has occurred, and the ensuing delivery of the shelves

and payment of the money constitute a quid pro quo. Yet the manager performed

only because he was bound by a commitment that he manifestly undertook for

reasons other than a wish to receive the student’s money. Indeed, his aim s, actual

and apparent, were frustrated when the student accepted the reckless oer.

The

67. I digress to obser ve that each of the previous two cases also serve as counterexamples to the

weaker, and less plausible, “I will if you will” theory of exchange—discussed supra note 50—

according to which two acts stand in an exchange relation just in case they are executions of

an “I will if you will” agreement. Indeed, even the reluctant gi oer case constitutes a coun-

terexample to the “I will if you will” theory, even though it can be handled by reciprocal in-

ducement. On the other hand, the next counterexample is eective only against reciprocal

inducement, and not against the “I will if you will” account.

68. Observe the dierence between this case and the case of so-called nominal or sham consider-

ation. When you “buy” the family farm for a dollar, the scare quotes are entirely appropriate.

In this case, by contrast, there is nothing problematic about saying that the student bought

the bookshelves at a steep discount, and scare quotes are neithe r necessary nor proper. Indeed,

any legal regime’s allowance of nominal consideration must be seen as an exception to, rather

the yale law journal 129:690 2020

724

conditions of reciprocal inducement are not met and are therefore too strong,

ruling out genuine instances of exchange.

B. Remuneration Theory of Exchange: A Defense

By contrast, the remuneration theory of quid pro quo locates the dispositive

element of exchange in the (perceived) normative signiﬁcance of the perfor-

mances, not in the actual or apparent motives that led the parties to perform

them. Speciﬁcally, two acts constitute an exchange when the parties regard each

act as payment for the other. The task that remains is to explain this relation of

reciprocal payment. Again, I beli eve that it is our failure to articulate the distinc-

tion between debt and non debt obligations that has been the source of our di-

culty isolating and articulating the relevant element of exchange. For as we have

seen, the mere presence of obligations, even mutual ones, is not sucient to dif-

ferentiate quid pro quo exchanges from the broader class of “I will if you will”

agreements. Armed with the more ﬁne-grained notion of debt obligation, how-

ever, we will at last be able to cordon o exchanges.

The ﬁrst element of quid pro quo, Reciprocal Debt Satisfaction, invokes the

notion of debt obligations. The category of debt is reﬂected in our ordinary lan-

guage, which reserves the language of “debt” and “indebtedness” for some obli-

gations (e.g., the obligation to repay incurred upon borrowing or upon negli-

gently dama ging another’s property) while withholding it from others (e.g., the

obligation to provide incurred upon procreating or to go home for the holidays

than a fulﬁllment of, a consideration, justiﬁed, if at all, by the manifested intentions to be

legally bound.

69. A more important class of cases that could be used to establish the same point (the underin-

clusivity of the motivational conception of exchange) is the class of so-called “prove me

wrong” contracts, where sellers of goods or services demonstrate their faith in their product

by oering to provide something of value to anyone who can detect some particular ﬂaw.

Here, too, the oerors may be serious but are manifestly not aiming for acceptance. For a ﬁnal

counterexample, showing that the conditions of reciprocal inducement are too strong, con-

sider an independently wealthy artist who ﬁnds the idea of selling art disgusting. Notwith-

standing these views, the artist puts a painting on auction because he believes that it will only

garner critical attention if enough people commit to buying it at a high price. This is a com-

promise for him, and so, in the wake of the auction, he executes a prior, publicly broadcasted

plan and ﬂushes the money down the drain as s oon as the highest bidder’s check clears. Here,

too, receipt of the money was only a side eect, and not an aim (actual or apparent), of the

artist’s prior commitment to give the art to the highest bidder. If the check had not cleared,

the artist’s apparent aims would not have been frustrated in the slightest. While the artist’s

promise to transfer the art was made with the apparent aim of inducing the counterpromise,

it was not made with the apparent aim of inducing the performance of that counterpromise

(i.e., receiving the payment). And yet, when the money and the painting are transferred, they

stand in an exchange relation.

paid on both sides

725

upon giving assurance to a nagging parent). More signiﬁcantly, debt obligations

are distinguished by a logical structure that can be given precise articulation.

To understand the mark of debt, we must distinguish between an obliga-

tion’s performance, fulﬁllment, and extinguishment conditions. An obligation’s

performance condition, in my terminology, designates the element in common

between two outstanding debts, each requiring payment of ﬁve dollars to the

same individual. Intuitively, we may say that an obligation’s performance condi-

tion speciﬁes the course of conduct called for by the obligation. An obligation’s

fulﬁllment conditions are the necessary and sucient conditions for fulﬁlling

the obligation. When obligations are fulﬁlled, they are typically extinguished—

that is, they cease to exist. But fulﬁllment is not the only way to eliminate an

obligation. Just as the desire for food may be extinguished either by eating or by

getting punched in the stomach, so too are there other ways of eliminating an

obligation beyond fulﬁlling it. Some that are especially relevant in the cont ext of

debt are forgiveness (that is, waiver), set-o, death, and discharge in bank-

ruptcy.

Armed with these distinctions, we may state the distinguishing mark of debt

obligations. In brief, what serves to dierentiate debts from other obligations is

that satisfaction of a debt’s performance conditions does not guarantee the debt’s

fulﬁllment (herein, the debt’s satisfaction). Suppose, for example, that B has an

outstanding debt in the amount of ﬁve dollars due to A on account of a loan. We

cannot infer, merely from B’s payment of ﬁve dollars to A (that is, merely from

the satisfaction of the performance conditions), that B has satisﬁed the debt. Af-

ter all, B may be paying the purchase price to acquire additional merchandise

from A, or B may be satisfying some other preexisting debt owed to A (or to

some third pa rty who directed payment to A). This, of course, raises the question

of just what is needed, beyond performance, to satisfy a debt. What is needed to

fulﬁll a debt obligation is not just performance, but performance in satisfaction

of that particular obligation and not some other debt. This distinguishing feature

of debt—that is, the distinctive mode of self-reference that ﬁgures in the fulﬁll-

ment conditions—furnishes the possibility of accumulating multiple debts, each

calling for the same conduct, and explains ordinary strictures against double

counting (for instance, that a single payment of ﬁve dollars cannot satisfy two

ﬁve-dollar debts). This, in turn, raises the question of how one performs in sat-

isfaction of some particula r obligation. But before we address this question, let

us ﬁrst consider the contrasting case of nondebt obligatio ns, as well as an im-

portant objection to my position.

70. I do not mean to suggest that these are always possibilities—whether they are will depend on

the subject matter as well as on the rules of customary or legal regimes. But when the y are

possible, they are alternative ways, distinct from fulﬁllment, of extinguishing obligations.

the yale law journal 129:690 2020

726

Although gratuitous promises or assurances can, I believe, generate debts,

they oen do not, and so we may look to them for illuminating, contrasting ex-

amples. In these cases, there is usually no distinction between an obligation’s

performance and fulﬁllment conditions. This is because there is typically no self-

referring element in the obligation’s fulﬁllment condition—that is, no reference

to “that particular obligation” within the co nditions of fulﬁllment— which means

that there will be no question raised about double counting, and no possibility

of stacking one such obligation on top of another.

If I gratuitously assure some-

one that I will be present at a certain event, or that I will sing a certain song at a

karaoke party, or that some child will have lunch money in their pocket before

setting o for school, whether I have done these things is usually all we need to

know to determine whether I have fulﬁlled the obligation. Of course, this is not

to say that the reasons for which I followed through (or, more to the point, my

conception of my own performance) are utterly irrelevant in such cases—they

will be most relevant for an assessment of my character and will indicate, in par-

ticular, whether I take my obligations seriously. (Additionally, depending on the

case, my motivating reasons for conforming may also cast light on my level of

care and concern for the people who have reasonably relied on me.) But these are

distinct from the question whether I have fulﬁlled the obligation to perform that

I incurred when I gave someone my word, and, in particular, these matters will

not raise the question whether I need to perform again in order to conform to

the under standing that had been reached when I gave my word.

In order to get a better grasp on the conceptual structure of debt, and in order

to consider an objection to my account of quid pro quo exchange, we must in-

troduce a distinction between performance conditions that are repeatable and

those that are not. Repeatable performance conditions are ones that can, in prin-

ciple, be satisﬁed more than once. Transferring a certain sum of money to a cer-

tain person is a ready example, but repeatable performances are not limited to

money payments. I may owe you ﬁve (generic) bushels of corn or one hundred

push-ups, and these too are examples of obligations with repeatable perfor-

mance conditions. By contrast, if I am obligated to do something that can be

done only once (for instance, destroy some particular idol or remove this pile of

snow from this driveway on this occasion), this would be an example of an obli-

gation with a nonrepeatable performance condition. Given this distinction, some

might be tempted to deny that the normative concept that I have identiﬁed as

71. Of course, in particular cases one may build the self-referring element into the content of a

gratuitous promise or assurance. This would be a way of generating a debt by a gratuitous

commitment, and I certainly do not mean to suggest that no such gratuitous commitments

give rise to debts.

72. For a powerful statement of this general position regarding obligations in general, see T.M.

SCANLON, MORAL DIMENSIONS: PERMISSIBILITY, MEANING, BLAME (2010).

paid on both sides

727

the concept of debt can apply at all to obligations with nonrepeatable perfor-

mance conditions. Aer all, they might argue, the distinction between debt and

nondebt obligations that I have drawn has practical import only where it is pos-

sible to accumulate, and satisfy, multiple debts, each one calling for its own ren-

dition of the same type of performance. And since this is only possible with re-

spect to obligations with repeatable performance conditions, the class of debt

obligations ought to be viewed as limited accordingly.

Such a view of the scope of debt obligations certainly would be incompatible

with my account of quid pro quo exchange: aer all, the possible objects of ex-

change are surely not limited to repeatable acts (for instance, you may oer me

a sum of money to smash some particular idol to smithereens, and we may com-

plete the exchange). However, such a position regarding the scope of debt takes

too narrow a view of the practical signiﬁcance of an obligation’s classiﬁcation as

debt and should be rejected. To be sure, the advantages of being able to create

debt obligations are particularly salien t in cases involving repeatable perfor-

mance conditions: when multiple debts of this kind are accumulated, each one

can receive its own separate rendition of the same repeatable performance.

But,

as I will show, this by no means trivializes the signiﬁcance of the distinction be-

tween debt and nondebt obligations when the performance conditions are non-

repeatable. On the contrary, reﬂection on exchanges involving obligations with

nonrepeatable performance conditions shows not merely that determining such

obligations to be debts carries practical signiﬁcance; stronger still, our intuitions

concerning such cases can only be explained on the assumption that the relevant

obligations, despite having nonrepeatable perf ormance conditions, are genuine

debts. Thus, consideration of these cases does not merely serve to rebut an ob-

jection against my position but also constitutes a positive argument in favor of

the thesis that all quid pro quo exchanges (whether involving repeatable perfor-

mances or not) fulﬁll Reciprocal Debt Satisfaction.

My analysis of such cases relies on a ﬁnal distinction between species of debt.

I have said that in order to satisfy a particular debt obligation one must satisfy

the obligation’s performance conditions in satisfaction of that particular obliga-

tion and not in satisfaction of any other debt. “Any other debt” in this formula is

susceptible to two interpretations, corresponding to two dierent species of

debt. On the weak reading, “any other debt” means any other debt owed to the

same creditor. On the strong reading, “any other debt” means any other debt tout

73. Indeed, this is presumably why the language of “debt” is most naturally invoked in reference

to those debts with repeatable performance conditions. In my view, however, this should be

seen as a superﬁcial, if understandable, feature of the language, on par with the general ten-

dency to restrict usage of the ter m “payment” to remunerative acts consisting of money pay-

ments (rather than the transfer of goods, say).

the yale law journal 129:690 2020

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court, whether owed to the same credi tor or another one. There is no reason to

think that all debts ﬁt the same mold, and it will be a function of the understand-

ing of the parties—at least when the debts are the product of consensual agree-

ment—whether the debt is a strong or a weak one.

With this distinction in view, I will proceed to demonstrate the signiﬁcance

of the distinction between debt and nondebt obligations even in cases involving

nonrepeatable performance conditions. Let us begin with a case. Suppose that

B, a shop owner, has an interest in having snow removed from a common lot

that her customers use for parking when frequenting her shop. B calls A, who

has a private snow-removal business, and expresses an interest in hiring him to

do the job. A quotes B his rate (listed on his website), and B, agreeing to pay at

that rate, hires A to do the (nonrepeatable) job. A proceeds to do the job and

sends B the bill. Before paying the bill, however, B learns that C, another store-

keeper in the neighborhood with a similar, independent interest in having the

snow removed from the same particular lot, had independently hired A to do the

same job and had already paid the bill that he, too, had been sent. The question,

then, is whether B must pay A, or whether she can say, as a valid defense, “you’ve

already been paid.” Opinions will dier, but I speculate that many will say that

the latter is a valid defense against A.

Rather than oering an opinion about

whether B ought to pay, my present claim is merely that “you’ve already been

paid” can be a valid defense in this case only given two conditions. First, each of

A’s commitments, made to B and to C, must have been the undertaking of a debt

obligation to remove the snow from the particular lot. Second, A’s commitment

to B must have been the undertaking not just of a debt obligation, but of a strong

debt obligation. Given this understanding of A’s commitments, A cannot fulﬁll

both debt obligations by the single act of removing the snow from the lot, since

a strong debt obligation cannot be fulﬁlled by an act performed in satisfaction of

a dierent debt obligation. Accordingly, having already collected payment from

C on account of completing his end of the deal (by removing the snow from the

lot), A cannot also claim to have fulﬁlled the obligation owed to B, and hence

cannot demand payment from B for having done so. This, in turn, shows the

signiﬁcance of understanding the obligation to perform as a debt even when the

performance condition is nonrepeatable.

Defending the claim that B has a valid defense only if A’s obligation to her

was a strong debt requires eliminating a competing explanation: the alternative

theory that B has a valid defense because, before entering into the agreement

74. Whether a tortfeasor’s obligation to compensate a victim is a strong or a weak debt will be a

function of either the practice (of the tort regime) or of the moral principles underlying the

practice.

75. Notice, though, that this verdict still leaves open the question whether B owes anything to C.

paid on both sides

729

with B, A was anyway planning to do the job to fulﬁll a previous commitment.

This competing explanation can be rejected on two grounds. First, the original

description of the case, while specifying that C was ﬁrst to pay the bill, was silent

about the sequence of contracting; accordingly, we may enrich the description of

the case and specify that B was ﬁrst to contract with A, even though C was ﬁrst

to pay. When we enrich the description in this way, the earlier intuition, I sub-

mit, loses none of its force. Second, we may establish the same point by intro-

ducing a variation of the original case. In this variation, before paying the bill B

learns not that C, who has an independent interest in A’s doi ng the job, had

already paid the bill that was sent to him but rather that A (or A’s agent) had,

prior to A’s contracting with B, already gratuitously committed to C that A

would do the job. In this case, opinions might dier as to whether A is a scoun-

drel for not informing B about his prior plans and commitments (if A was, in-

deed, aware of them at the time of contracting with B). But what is clear enough

is that B is obligated to pay A, notwithstanding A’s prior commitment. Whereas

“you’ve already been pai d” has considerable force as a defense, “you didn’t tell

me yo u were going to do it anyway” does not.

As I stated, not everyone will share the judgment that B has a valid defense

in the original case. Even those who resist this judgment, though, cannot plau-

sibly deny either that A’s obligation is a debt or that this fact carries normative

signiﬁcance; rather, their judgment that the defense is not valid depends on the

view that A’s obligation is a weak debt rather than a strong one. To see this, we

need only consider another variant of the original case, in which C is not some

other storekeep er with an independent interest in clearing the lot but rather is

B’s agent (perhaps the store manager). Due to a failure of coordination (perhaps

owing to the snowstorm), B and C each call A and separately enter into agree-

ments with him to clear the lot. Aer doing the job, A sends bills to their separate

addresses. Sometime aer C has paid the bill that was sent to him but before B

has paid the bill that was sent to her, they confer and become ap prised of the

situation. Surely in this case, “you’ve already been paid by my agent” is a valid

defense. But this could only be explained if A’s obligation is understood as a

debt, albeit a weak one.

If it were not, the prospect of “double counting” would

76. These intuitions do not depend on A’s fraudulent misrepresentations: they do not change if

we suppose that one of the contracts was conducted by A’s agent, who likewise suered from

a failure of communication with his principal, so that no fraudulent misrepresentations oc-

curred. Likewise, we must not think that the intuitions can be explained by positing that only

a single agreement was forged, despite the two job orders. It is untenable to say that there was

only one “a greement in fact,” for the agreements have dierent properties (e.g., they occurred

at dierent times). Indeed, in analogous cases involving repeatable performances—for exam-

ple, when a failure of communication lea ds both a principal and her agent to each purchase

the yale law journal 129:690 2020

730

raise no concerns, and A would be able to claim that he has performed his side

of each of the two agreements. Only if the obligations are debts could B resist

paying on the grounds that A cannot fulﬁll each of the tw o agreements with a

single performance.

Having established the signiﬁcance of classifying an obligation as a debt,

even when the performance conditions are nonrepeatable, we are nearly done

with our treatment of Reciprocal Debt Satisfaction, the ﬁrst element of quid pro

quo exchange. We are le only with the question of how to interpret the self-

referential component in the deﬁnition of debt—that is, to determine what is

needed to perform in satisf action of this debt (and not some other one). We may

immediately reject, as too demanding, a view that would require, as a condition

of satisfying a particular debt obligation, that the performance be rendere d with

the aim of satisfying that particular obligation. Aer all, a debt could surely be

satisﬁed when its satisfaction is just a foreseen side eect, rather than an aim, of

the performance. (My aim, suppose, is solely that you have ﬁve dollars in your

pocket on a given day, and I know that you do not accept handouts.) It is tempt-

ing, therefore, to retreat to a knowledge requirement, according to which the

the same fungible commodity on Amazon, even though only one is needed—there is no im-

pulse to say that only a single agreement had been forged with Amazon. (Even if the mistake

entitles them to money back—and it is by no means clear that it does—the explanation for

this would not be that only one agreement had been forged; rather, the explanation would be

that they had intended to forge only one such agreement.)

77. There are many other cases of quid pro quo exchanges involving weak debt. One such case,

important for contract law, involves three-party versions of “preexisting duty” cases, which

are discussed in their two-party versions in Section III.B.2 infra. In such three-party preexist-

ing-duty cases, discussed infra note 121, a promisor enters into an agreement to pay for a per-

formance that the promisee has already contracted with a third party to provide. In some such

cases, the promisor is aware of the promisee’s outstanding obligation before making the com-

mitment, but promises to pay for the performance, usually as a result of the promisee’s cred-

ible threat not to fulﬁll the preexisting duty unless he gets more than what was originally

promised by the third party. Sometimes such threats will be “fair and equitable,” as when the

cost of performance has, unforeseeably, risen considerably. With respect to the “fair and eq-

uitable” cases, the promisor surely cannot use the “you’ve already been paid” defense to avoid

making the additional payment, as she was apprised of the preexisting debt in advance. Since

this defense is not available, we cannot say that the promisee’s second promise to perform

created a strong debt. But even in this case, we must conceive of the promisee’s obligation as

a weak debt rather than a nondebt obligation. Aer all, here too, if the promisor’s agent had—

due to a failure to communicate with his principal—gone on to make the same deal with the

same promisee (the one threatening not to do the job unless he received more), the promisee

would not be entitled to collect from both the agent and the principal aer completing the

job. (And here, too, we needn’t suppose that the explanation of our intuitions has anything

to do with fraud or misrepresentation. Aer all, let us suppose that one of the renegotiations

was conducted with the promisee’s agent, who likewise suered from a failure of communica-

tion with his principal.)

paid on both sides

731

performance must be accompanied by an understanding—perhaps a manifested

one—that in performing, the debtor is satisfying this obligation (and not some

other debt). This might be right—and, if it is, it would be perfectly consistent

with everything else I say in this Article. However, I believe that even this re-

quirement is too demanding. It must be recalled that the motivation for dier-

entiating debts from the broader class of obligations is not a concern with

whether the agent has more virtuous mental states when fulﬁlling a particular

class of obligations. Rather, the motivation is to explain why, in some circum-

stances, double counting of obligations is ruled out—that is, why multiple dis-

tinct obligations cannot always be discharged by a single performance.

Accord-

ingly, I suggest that we should simply interpret the “in satisfaction” clause of the

fulﬁllment conditions as weakly as possible while meeting this motivating con-

cern. Thus, if a debtor has only one outstanding debt with a given performance

condition, then performance is sucient for satisfaction of the debt, provided

the debtor does not specify that his or her performance is not rendered in satis-

faction of the debt (for instance, as when he speciﬁes that the performance is the

creditor’s birthday gi or for some new merchandise). It is only when the debtor

has multiple debts calling for the same performance that speciﬁcation (that is,

an expression of an understanding that one’s performance is satisfying a partic-

ular obligation) might be required. Even here, acts of speciﬁcation may not be

needed when custom or law dictates which performance pays o which debt.

Before turning to the second element, one more observation is in order. It is,

I have said, a necessary condition of quid pro quo exchanges that the parties un-

derstand their performances as satisfying Reciprocal Debt Satisfaction, a relation

I have tried to explicate. But it does not follow from any of this that the law’s

decision regarding the legal rights and obligations that result from such under-

standings must perfectly hug the contours of the understandings themselves.

For the law might have its own reasons for deviating from the parties’ own un-

derstanding even in cases when it requires that understanding as a condition of

enforcement.

So, for example, if the distinction between strong debt and weak

78. Very roughly, this double counting will be a relevant concern when the obligated performance

is seen as in some sense a substitute for what the other party gave (in the case of contractual

debts) or gave up (in the case of torts).

79. For example, a custom might adopt a ﬁrst-in, ﬁrst-out rule on which a given performance

satisﬁes the oldest debt calling for a particular kind of performance if multiple such debts

exist.

80. Even Seana Shirin, who has prominently criticized the law of contracts for allowing diver-

gences between contractual obligations and promissory ones, acknowledges that divergence

may be acceptable when there are “distinctively law-regarding grounds [for the divergence],

such as the diculty and expense of” enforcing the promise in a given case. Seana Valentine

Shirin, The Divergence of Contract and Promise, 120 HARV. L. REV. 708, 733 (2007). I argue

the yale law journal 129:690 2020

732

debt is too reﬁned to be easily ascertained, the law can treat all debt like weak

debt.

Reciprocal Debt Satisfaction serves to explain why the nondonative collabo-

rative agreements considered earlier (such as “I’ll enlist, if you enlist”) do not

qualify as quid pro quo exchanges. When friends or members of preexisting co-

operative units commit to plans involving the coordination of their activities, the

ensuing obligations are not typically regarded as debts, and so do not typically

give rise to problems related to double counting or to the possibility of stacking.

While this ﬁrst element states a neces sary condition of exchange, however, it is

not sucient. The second element, as I have indicated earlier, speciﬁes that the

parties understand that, following the sequence of performance, no outstanding

obligations (debt or otherwise) will remain on account of either performance.

This second condition is not only motivated by the theoretical considerations

regarding the function of the quid pro quo transactional for m consid ered at the

outset of this Part; it is also motivated, more concretely, by intuitions about par-

ticular cases.

One may show that the ﬁrst condition is not sucient by considering trans-

actions that satisfy it even though one of the performances is mutually un der-

stood by the parties to constitute a gi. One sort of example involves nominal

consideration (in jurisdictions that recognize such consideration). As I have al-

ready observed, when, merely in order to make a contract binding in law, one

“sells” the family farm to a nephew for a dollar, the scare quotes are in order

because there has been no genuine quid pro quo.

However, even in such a case,

the parties may regard their performances as satisfying Reciprocal Debt Satis-

faction. Aer all, it may be important to the donor that the transaction satisﬁes

the prerequisites for legal recognition, which may include payment to the donor

of the nominal amount agreed upon. Other co nditional gi arrangements might

illustrate the same point more vividly, as when a promise to give someone exclu-

sive access to a huge tract of valuable land is made conditional only on the prom-

isee’s promise to reimburse the owner for the costs generated by the former’s

activities on the property (such as reimbursement for electricity bills). Depend-

ing on the context, the parties may reasonably insist that a quid pro quo has not

transpired, even though the respective ob ligations would seem to stand in recip-

rocal debt relations. The promisee must make the reimbursement payments,

and, in doing so, all strictures against double counting would seem to apply.

Again, the common feature of these examples is that one of the performances in

each case is regarded by the parties as a gi. On ordinary social understandings

against Shirin’s position in Jed Lewinsohn, “By Convention Alone”: Assignable Rights, Dis-

chargeable Debts, and the Distinctiveness of the Commercial Sphere (Nov. 2019) (un-

published manuscript) (on ﬁle with author).

81. See supra note 68.

paid on both sides

733

(and I do not mean nor need to defend these widespread understandings), gis

are precisely the sorts of transactions that generate lasting normative bonds—in

particular, debts of gratitude or duties to reciprocate. Accordingly, No Residue is

able to explain why such transactions are not genuine quid pro quo exchanges in

spite of the debt relations.

More generally, No Residue ensures that in quid pro

quo agreements, the exchanged performances are understood by the parties to

give rise to no persisting debts of gratitude or duties to reciprocate.

According to the remuneration theory, performances constitute a quid pro

quo because the parties to the agreement understand those performances to sat-

isfy Reciprocal Debt Satisfaction and No Residue. But on what basis do the par-

ties reach this understanding? In the case of the ﬁrst condition, we might say

that they understand their agreement itself to be the explanatory ground of the

debts contemplated therein. That is, the reciprocal debt obligations that the par-

ties recognize are the product of mutual assent to stipulated terms. In other

words, the terms describe reciprocal debt obligations that the parties take to ob-

tain in virtue of their assent. The more dicult question is how they reach the

understanding captured by No Residue—namely, that no debts of gratitude per-

sist in the aermath of the performances. The reason this question is dicult is

that debts of gratitude can be contested (with such phrases as “oh, it was noth-

ing,” “it was a pleasure,” “I was planning to do it anyway”), but they cannot be

created by ﬁat or eliminate d by waiver.

So if it belongs to the parties’ under-

standing that the ensuing performances give rise to no such debts, it must also

82. While I have emphasized that the donee’s obligation can have the character of a debt, I am

also assuming that the obligation undertaken by the donor can also have that character. Sup-

pose that Smith, the owner of a valuable tract of land (Blackacre), agrees to gi to her friend

Jones exclusive use rights to Blackacre (rights that have a high market value), on the occasion

of Jones’s wedding, provided only that Jones agrees to reimburse Smith for any taxes that

accrue from the transfer. Jones gratefully agrees, but, before performing, Smith incurs a debt

(debt

), owed either to Jones or to a third party, which can be satisﬁedby transferring to Jones

the use rights over Blackacre (absent any commitment to reimburse for the taxes). If Smith

transfers Blackacre to Jones in satisfaction of debt

she cannot also claim to have fulﬁlled her

wedding day commitment, and, accordingly, cannot demand reimbursement payments from

Jones for the taxes.

83. We may also note that fulﬁllment of No Residue does not entail fulﬁllment of Reciprocal Debt

Satisfaction. To see this, consider again the case of the two friends who agree to enlist together

in the army, and then subsequently carry out the plan. Here, debts of gratitude do not arise

and No Residue is satisﬁed. The same may be true of many genuinely shared, mutually ben-

eﬁcial activities, like the execution of a plan to play tennis on a certain occasion.

84. This was recently emphasized by Barbara Herman. See Barbara Herman, Being Helped and

Being Grateful: Imperfect Duties, the Ethics of Possession, and the Unity of Morality, 109 J. PHIL.

391 (2012). In conversation, Ben Eidelson has suggested to me a plausible explanation for the

nonwaivability of debts of gratitude: the gratuitous waiving of such a debt would be pointless,

since it would simply result in the creation of a new debt of gratitude, this time incurred by

the yale law journal 129:690 2020

734

belong to their understanding that there are features connected with either the

performances themselves, or their agreement to perform them, that preclude

those debts from existing.

But what are these vitiating features? The mere fact that each party stands to

gain from the execution of the agreement cannot be enough. To see this, consider

two friends, F and G. F helps G edit G’s long article one weekend, while G helps

F research wedding venues the following weekend. While the reciprocity these

friends exhibit is hardly an insigniﬁcant feature of their relationship, the parties

will not typically walk away from th is sequence with no debts of gratitude; ra-

ther, at least in many cases, they will walk away with two. These debts, unlike

commercial ones, are not only impervious to waiver but also unsusceptible to

elimination via set-o. We may note that nothing changes at all if we add the

fact that the parties agreed to this plan in advance. That is, the parties agreed to

a plan involving two favors on successive weekends, provided that they do not

adopt the plan with the understandings that constitute a quid pro quo agree-

ment. And they may have subsumed the favors under a single plan for many

reasons other than an understanding that each one is payment for the other. For

example, sub suming both favors within a single plan may have been the only

way to coordinate busy schedules or may have merely reﬂected anxiety that the

friendship was becoming too imbalanced. In many such cases, the friends will

each walk away feeling appropriately grateful on account of the other’s perfor-

mance. Accordingly, we have not yet located the bases upon which the parties

reach the understanding that satisﬁes No Residue.

This problem, I believe, expla ins the connection between qui d pro quo ex-

change and instrumental motives—that is, between doing X in exchange for Y

and doing X in order to get Y. The connection runs very deep. One of the oldest

surviving records of the oldest-known Greek script (Linear B) is a report of an

exchange transaction (“[fourteen female] slaves of the priestess” in exchange for

“sacred gold”), and the term for “e xchange” that is used (transliterated as “e-ne-

ka,” typically translated as “on account of”) is a motivational one.

There are

also common-law authorities within our purview that refer, albeit loosely, to the

“price” and “motive” of a contract in a single breath, thereby drawing a connec-

tion between the notion of remuneration and that of inducement.

At the very

the preceding waiver. Of course, this supposes that the waived debt and the new debt would

be identical in magnitude, an assumption that may be contested.

85. COLIN RENFREW, ARCHAEOLOGY & LANGUAGE: THE PUZZLE OF INDO-EUROPEAN ORIGINS 61

(1988) (“At Pylos: slaves of the priestess on account of [eneka] sacred gold: 14 women.”).

86. For example, Blackstone remarks that “[t]he civilians hold, that in all contracts, either express

or implied, there must be something given in exchange, something that is mutual or recipro-

cal. This thing, which is the price or motive of the contract, we call the consideration.” BLACK-

STONE, supra note 36, at *446.

paid on both sides

735

least, no one would deny that there is a strong empirical generalization linking

the exchange form and the apparent motives picked out by reciprocal induce-

ment—that is, many or most exchanging parties in fact appear to perform or

commit to perform partly in order to induce the counterparty’s performance. But

I believe that the connection is even stronger and of a conceptual nature. Alt-

hough, as we have seen, the apparent motives that reciprocal inducement picks

out are neither necessary nor sucient for quid pro quo exchange, I submit that

they oen serve as the basis of the parties’ understanding that satisﬁes No Res-

idue. Aer all, on standard conceptions of gratitude, debts of gratitude are sen-

sitive to the motives and attitudes that move a benefactor to confer the beneﬁts.

Accordingly, in many cases it is precisely each party’s conception of the instru-

mental, nonaltruistic motives of their counterparty that supports their common

understanding concerning the absence of de bts of gratitude. In these cases, par-

ties who understand themselves to be “all paid up” following the sequence of

beneﬁcial performances also understand themselves, rightly or wrongly, to pos-

sess these instrumental motives and attitudes.

Several further observations are in order. First, the instrumental motives in

question are not the only possible vitiating factors that can support the parties’

understanding concerning the absence of debts of gratitude. Indeed, the earlier

example of the student in the Vitra store is a case in point. The sale in that case

demonstrated that reciprocal inducement is not a necessary condition of quid pro

quo exchange. But notice that there are other features of that case to which the

parties could readily appeal in reaching their understanding concerning the ab-

sence of debts of gratitude. Most obviously, it is not just that the manager was

not trying, or expecting, to beneﬁt the student or to satisfy his wishes; stronger

still, what the manager was aiming for, and expecting, was to embarrass or ex-

pose the student by making an attractive oer he would be unable to accept.

Second, while these imputed motives are strong enough to vitiate a debt of

gratitude, they are weak enough to coexist alongside the noninstrumental valu-

ing of one’s service and one’s counterparty, and do not entail or presuppose an

87. When the apparent motives picked out by reciprocal inducement do serve as vitiating factors,

these apparent motives must correspond to the strengthened version of that theory, consid-

ered earlier, on which each performance would not have been given but for the fact that it

would induce a reciprocal performance. This is because a debt of gratitude would still arise

were a desired service rendered with the partial aim of promoting the provider’s own inde-

pendent ends unless the provider would not have performed the service had it not been expected

to promote his or her independent ends. This is defended at length in my book-length treat-

ment of quid pro quo, see Lewinsohn, supra note 62, and is related to similar claims made by

Seneca, see LUCIUS ANNAEUS SENECA, ON BENEFITS (Miriam Grin & Brad Inwood trans.,

Univ . of Chi. Press 2011) (c. 60 C.E.), and Hume, see HUME, supra note 63 , at 225-27, 331-37.

In applying this to the case of exchange, some ﬁnesse is needed on the plausible assumption

that not every exchange oer is represented as a ﬁnal oer.

the yale law journal 129:690 2020

736

attitude of indierence toward either the ser vice or the counterparty. For exam-

ple, a sculptor (or even a banker) may insist on receiving payment from a be-

loved customer only because she needs to support her own family or because she

does not wish to treat her customers dierently on th e basis of her aections,

not because she treats either the customer or her own sculpture with indier-

ence.

Although this completes the elaboration of the remuneration theory of quid

pro quo, we may brieﬂy consider a class of potential counterexamples. I have in

mind cases involving quid pro quo transactions that nonetheless give rise to

debts of gratitude. Some examples might include: a seller who gratuitously of-

fers someone the opportunity to purchase something (at market rates) before

oering the product to an eager public, or one who oers an individualized dis-

count, or an editor’s acquisition of a ﬂedgling writer’s ﬁrst novel aer all the

other editors have passed. These cases can be dealt with in either of two ways. In

some cases, we can distinguish between the performance under the contract and

some other element of the transaction that gives rise to the debt of gratitude.

This is obviously true, for instance, with respect to oers of ﬁrst refusal—that

they are distinct from the performance is evidenced by the fact that rights of ﬁrst

refusal can be separately purchased. In such cases, what we are grateful for is

getting the ﬁrst crack at the apple, which is given gratuitously apart from any

quid pro quo, not for the subsequent quid pro quo transfer of merchandise at

market rates. And No Residue speaks only to the performance pro per. I submit

that this strategy will serve to neutralize most putative counterexamples.

Nevertheless, I am prepared to accept that there may be cases where a debt

of gratitude is generated by a performance in a quid pro quo exch ange, even

when the service provider would not have performed if he did not stand to gain.

These cases will be fewer in number than we might at ﬁrst think, especially once

we take pains to distinguish between apt or intelligible gratitude, on the one

hand, and gratitude that is in some sense required (on pain of rendering one

liable to a charge of ingratitude), on the other, since only the latter could consti-

tute a counterexample to my theory. Perhaps the case of the editor would be one

example, though it seems that even here the recognition of talent in a wr i ter, by

way of making an oer to publish the work, would be distinguisha ble from the

editor’s performance under the ensuing contract—or the services of a brilliant

surgeon or psychotherapist who changes the life of his or her patient for the bet-

ter. In other words, perhaps in cases like these the service provided (that is, the

service that is owed and not something above and beyond the call of duty) is so

meaningful to the recipient that it will generate a debt of gratitude even when

the provider would not have provided those services if the recipient had not paid

for them.

paid on both sides

737

In some of these cases (if there are any), the recipient of the meaningful ser-

vice may not have recognize d, at the time the agreement was made, the debt they

would come to incur. Such cases, too, pose little diculty for No Residue, since

it is the understandings at the time the agreement is made that are dispositive.

But perhaps there are cases where, even at the time the agreement is made, the

parties know, at least on so me level, that a debt of gratitude will persist aer the

performances. What I would say about such cases is that they are only genuine

instances of quid pro quo exchanges if the parties, at the time the agreement is

made, look past the relevant debts in the way conversing adults sometimes look

past disagreeable odors or sounds, choosing not to acknowledge what is blowing

in the wind. In such cases, there may be a discrepancy between the ocial ledger,

constitutive of the parties’ shared understanding, and what they know but

choose not to acknowledge—that is, they may act as though no debt of gratitude

exists even if they know that it does. And, in such cases of discrepancy, the ac-

count I have oered follows the ocial ledger. To be sure, what I am calling the

ocial ledger is in some sense a social and conventional artifact; but, then again,

so are transactional forms.

Although I have claimed that Hume and Smith were wrong to view the ex-

traction of services from strange rs as the most basic feature of exchange,

they

were right to see quid pro quo exchange as in some way alien to the sphere of

friendship—a judgment that, I believe, is conﬁrmed by prevailing social norms.

The remuneration theory is able to render these norms intelligible, explaining

why intimates have reason to be reluctant to resort to quid pro quo in their deal-

ings with each another, even if such reasons can be overridden in appropriate

contexts. In particular, several aspects of quid pro quo exchange are prima facie

at odds with the values of friendship. These aspects warrant a fuller discussion

than I am able to give on this occasion, so I will simply articulate the elements of

the transactional form that might be the source of concern, leaving it for another

time to explain exactly why.

88. The form of pretense at issue in this paragraph (one that occurs at the time the agreement is

forged) is related to, and interacts in complex ways with, another familiar form of pretense

involving exchange. It is an important social fact that parties to explicit exchange agreements

sometimes attempt to obscure, or look past, the quid pro quo (“transactional”) character of

their relationship, not when the agreement is formed, but rather in the course of the ensuing

performances. This is especially recognizable in the context of care professions, as well as so-

called professions of higher calling, and might have understandable causes as well as mixed

results.

89. See supra text accompanying notes 63-64.

the yale law journal 129:690 2020

738

First, in cases where there is nothing else around that could vitiate debts of

gratitude, the exchange form would only be available to friends who could im-

pute to one another the motives picked out by the strengthened version of recip-

rocal inducement. That is, the parties must be able to impute to each other not

only the instrumental aims of serving partly in order to be served; more strongly,

they must understand one another as conditioning their willingnes s to help on

this occasion on the prospect of getting something in return.

Moreover, the

distinguishing feature of quid pro quo, as I have described it, is that it allows the

transacting parties to give and receive beneﬁts without incurring lasting duties

to reciprocate and debts of gratitude. But if friends see these residual obligations

to one another as more than mere liabilities, but instead as positive, albeit con-

straining, contributions to their valuable relationship, this would give them rea-

son to choose a dierent transactional form when one is available. Finally, if the

genealogical explanation I have suggested is on t he right track, then quid pr o

quo is a transactional form that came into the world to facilitate a certain kind of

arm’s-length noninvolvement that would otherwise be dicult to achieve

among givers and takers of wanted services. If this explanation is correct, it is

little wonder that friends, whose lasting bonds and ties are a source of meaning

and valu e, would want to employ a dierent form in their distribution of goods

and services to one another.

The account I have oered is also well positioned to explain the exceptional

cases in which friends appropriately employ the form in their dealings with on e

another. Many of these cases involve transactions that, for one reason or another,

guarantee continued involvement and lingering debts. This is true, for example,

of transactions involving gratuitous oers of ﬁrst refusal or of special discounts

extended to individuals on the basis of friendship. In such cases, even if the ex-

changed performances themselves do not give rise to lasting debts of gratitude,

the gratuitous elements of the transaction do, and the reasons friends have to

avoid the form will be cor respondingly diminished. In other cases, friends use

the form to avoid debts that their friendship cannot bear. It is an interesting

question why friends calibrate the degree of favors they are comfortable receiving

to the strength of their bond, but it is undeniable that they do. When a friend-

ship cannot bear the weight of a particular debt—for example, I would not feel

comfortable accepting an oer from ma ny of my friends for a rent-free sublease

of their house or apartment, even if they are not in need and will be away for the

year—the account that I have oered explains why the resort to exchange might

be acceptable. For in cases like these, it is importa nt to the friendship that the

debt be avoided, and exchange provides the means of achieving that desirable

90. To be clear, I do not mean to suggest that this is necessarily inimical to the values of friendship,

only that it might bear on such values, depending on the context.

paid on both sides

739

outcome. Of course, even in cases such as these, we will oen prefer to get the

service from a stranger (for example, by consulting Craigslist or the Yellow

Pages) rather than from an exchange agreement with a friend. This common

preference likely owes to many factors, but one of them might be the wish to

avoid having to communicate one’s views about the limits of what the friendship

can bear.

iii. two doctrines of consideration

In Part II, I articulated and defended a theory of exchange as reciprocal pay-

ment (or remuneration), distinct from the relation of rec ipr oca l inducement

(objectively construed). The present Part begins to make the case that a remu-

neration theory of exchange provides the materials for a consideration doctrine

far superior along the dimensions of both ﬁt and justiﬁcation. Before discussing

the problems with the orthodox approach , I will ﬁrst introduce the alternative

remuneration theory of consideration, which will enable us to compare the two

versions of the consideration rule.

A. The Remuneration Theory of Consideration

The basic idea behind the remuneration theory is that fulﬁ llment of the con-

sideration requirement is, in the ﬁrst instance, a function of the terms of the agree-

ment (objectively interpreted)—and not of what may have induced the promisor,

actually or apparently, to assent to those terms.

Speciﬁcally, as long as the par-

91. In constructing this theory, I stand on the shoulders of the almost-forgotten Henry Ballantine.

In a pair of extremely insightful law review articles from 1913 and 1914, Ballantine, a former

student of Williston at Harvard who would go on to become a professor of law at Berkeley,

bucked the emerging orthodoxy and maintained, as I do, that the consideration requirement

governs the “terms of the bargain”—claiming, in other words, “[T]he rule of consideration is

a mere test of the nature of the agreement, and the element of consideration may exist from

the start in the nature of the agreement as a bargain.” Henry Winthrop Ballantine, Is the Doc-

trine of Consideration Senseless and Illogical?, 11 MICH.L. REV. 423, 432 (1913); see also Ballantine,

supra note 31, at 132-33. Despite a brilliant paradigm shi and several forceful arguments

against the orthodoxy of his (and our) day, Ballantine’s articles, while garnering responses

from the leading contract scholars of his day, had no signiﬁcant impact on the development

of the law. This poor reception was not entirely unearned, however, as Ballantine was unable

to articulate the relevant feature of the terms or substance of the agreement in virtue of which

it would qualify as a bargain and pass the consideration test. He frequently refers to “mutual-

ity” and “reciprocity” as the essential elements—reﬂected in the title of his Harvard Law Re-

view article, Mutuality and Consideration. For example, he says that “the doctrine of consider-

ation is a not very successful attempt to generalize and reduce to a rule of thumb that

the yale law journal 129:690 2020

740

ties assent to an agreement that appears to contemplate reciprocal payment rela-

tions, relations which may, in turn, be understood in terms of Reciprocal Debt

Satisfaction and No Residue, the agreement satisﬁes the consideration require-

ment, regardless of what seems to have motivated the parties to lend their assent.

Furthermore, the element of exchange in virtue of which an agreement satisﬁes

the consideration rule may be found in the contemplated relation between the

promised performances. In a typical bilateral sales contract, for example, the par-

ties each assent to an agreement that not only requires the seller’s delivery of the

goods and the buyer’s transfer of the money, but that requires each performance

as payment for the other, with all the implications of this designation (such as

those involving strictures against double counting) that were laid out in Part II.

It follows from this that, so long as the agreement to which the parties assent

contemplates payment relations, the consideration rule may be satisﬁed long be-

fore any payment has actually been made.So far as the consideration rule is con-

cerned, what matters is that the parties have agreed to an exchange, not that an

exchange has occurred.

Of course, nothing in the remuneration theory rules out the possibility that

the parties may, on occasion, regard the promise itself—that is, the undertaking

of an obligation—as constituting one side of the relevant exchange relation.

When I buy an insurance policy, for example, my payment is arguably for the

insurer’s incurring an obligation to reimburse in the event of some accident, not

for any recovery that may or may not ever be made.

And the same is arguably

reciprocity which must exist in an agreement to make non-performance a legal wrong on the

part of the promisor,” Ballantine, supra, at 424, and that “[i]t would seem to be a sound prin-

ciple of law which demands some mutuality or reciprocity of engagement as the basis of a

contract,” Ballantine, supra note 31, at 132. When pressed to identify the species of mutuality

or reciprocity, however, the best he could come up with was that “[a]ny mutual promises

which contemplate the possibility of a required performance on each side constitute a contract,

since they involve mutuality or reciprocity in the things promised.” Id. at 126. Contrary to

Ballantine’s intentions, this deﬁnition severs the link between consideration and bargain al-

together, since, as I have already shown, the condition it states would be satisﬁed by all “I will

if you will” agreements, including those commitments to plans that few would categorize as

bargains. See supra Section II.A. Having recovered the concept of quid pro quo exchange, we

are in a position to improve on Ballantine’s account by oering a precise statement of the

features of the (apparent) terms of an agreement that must be present in order to satisfy the

consideration test.

92. Some might wish to resist this characterization and instead construe the insurer’s promised

performance conditionally: that is, the insured pays the premium, and in exchange the insurer

pays out coverage if a covered event occurs. (According to this construal, the insurer performs

even if the covered event never occurs.) Adopting this alternative characterization would in

turn allow us to replace the disjunctive deﬁnition of consideration, see infra text accompanying

note 93, with the following nondisjunctive version: A promise is supported by sucient consid-

eration if it can be inferred that the parties regard the promised performance as standing in a relation

paid on both sides

741

true of other classes of contracts, such as the issuance of bonds (or other nego-

tiable instrument s) for value. The lesson here is that just as it is a mistake to

single out the relation between the acts of assent as the exclusive site of exchange

(in virtue of which an agreement may pass a bargain test), so too is it a mistake

to focus exclusively on the relation between the promised performances.

With this in mind, we may advance the following statement of the consider-

ation rule: a promise is supported by sucient consideration if it can be inferred

that the parties regard either the promised performance, or the promise itself, as

standing in a relation of reciprocal payment to either the performance, or the

promise, of the promisee.

This can be restated using the language of quid pro

quo exchange: a promise is supported by adequate consideration if it can be in-

ferred that the parties regard either the promised performance, or the promise

itself, as standing in a quid pro quo relation to either the performance, or the

promise, of the promisee.

B. Testing the Theories

I will brieﬂy postpone discussion of the rationale for the consideration rule,

cast in terms of reciprocal remuneration, in order to consider several doctrinal

diculties facing the reciprocal-inducement account (that is, the modern rule).

We have already demonstrated, in Part II, that the modern rule embodies a

ﬂawed conception of a bargain or exchange. Accordingly, it comes as no surprise

to learn that the modern rule treats some patently gratuitous agreements as

though they belong to an exchange, and vice versa . I will proceed by giving two

well-known examples of such diculties, followed in each case by a demonstra-

tion of how the remuneration conception of consideration avoids the problem.

1. Conditional Gi Promises

The ﬁrst such diculty relates to whether the modern rule is compatible

with the view, universally held, that donative promises—promises to give a gi

of reciprocal payment to the performance of the promisee. However, despite appearances, there is

no reason to think that the nondisjunctive version is simpler. See supra note 20.

93. The phrase “it can be inferred” is meant to capture the fact that the deﬁnition is “objective”

and does not require the actual subjective understandings. Also, I reiterate that the disjunctive

formulation can be replaced with a nondisjunctive one if one is willing to accept a conditional

performance account. See supra note 92.

94. This way of restating the test assumes that if the parties mutually understand their acts as

satisfying the two conditions of reciprocal remuneration, then they also mutually understand

one another as so regarding their acts. None of my substantive cl a ims rely on this assumption.

the yale law journal 129:690 2020

742

to, or perform an unpaid favor for, the promisee—fail to satisfy the consideration

requirement.

The problem is easiest to grasp in the context of conditional gi

promises, where the oeror conditions a gi promise on receipt of a return

promise from the oeree. The example involving the loving aunt will serve us

again here,

though we will now shi our focus to the relation between the mu-

tual promises of the aunt and her nephew. The beneﬁcent aunt promises to gi

her nephew a sum of money if the nephew agrees to spend the money on art

(and not on alcohol), and the nephew agrees. The aunt’s oer was made eagerly,

in the sense that it was made with the aim of inducing her nephew’s acceptance

of the oer (and subsequent purchase of the art), and the nephew accepted with

the aim of satisfying the condition of his aunt’s commitment (and receiving the

funds). Whereas we previously observed that the motivational account of quid

pro quo (erroneously) classiﬁes the ensuing performances as standing in a quid

pro quo relation, we may now observe that the modern rule cannot avoid ﬁnding

consideration in this agreement: each party’s promis e was made for the apparent

purpose of inducing the other promise, which is precisely the re lation that, by

the lights of reciprocal inducement, must exist between the two promises them-

selves for consideration to be present.

95. Atiyah, describing that view, notes that “orthodoxy insists that a promise to make a gi is not

enforceable as a contract at all. The fact that the promise is conditional does not, according to

orthodox doctrine, render the promise enforceable.” ATIYAH, supra note 11, at 210. Atiyah goes

on to challenge the orthodoxy, but his grounds for doing so are not relevant here, as the case

under consideration involves no detrimental reliance.

96. See supra Section II.A.

97. Peter Benson has recently proposed an “independence” condition that, he says, will do the job

of explaining at least some of the conditional gi cases. Peter Benson, The Idea of Consideration,

61 U. TORONTO L.J. 241, 250-51 (2011). On his view,

consideration must be independent of the ﬁrst promise in the following way: it

must be possible to construe the content of the consideration as something that

genuinely originates with the promisee, not the promisor, and that is not simply

reducible to an aspect, condition, or eect of the ﬁrst promise. It must be some-

thing that is, as it were, initially on the promisee’s side and that is, therefore, not

produced by the promisor. Even if the consideration is, in fact, given aer the promise,

there must be no reason in principle why it could not possibly have initiated the interac-

tion and so have come ﬁrst.

Id. at 250 (second emphasis added). Now, if there were such a requirement, perhaps it could

explain why the sort of conditional gi promise under discussion (involving the loving aunt

and her nephew) does not pass the consideration test, even when it satisﬁes reciprocal in-

ducement. However, any requirement strong enough to yield this result is also too strong to

be an element of the consideration rule, as it would also rule out agreements that are un-

doubtedly supported by consideration. For instance, if a violin collector oers to loan a tal-

ented vi olinist a dierent Stradivarius each month provided that the violinist promises to use

paid on both sides

743

If contract law were strictly an intellectual exercise and not also a practical

aair, then the failure to explain cases involving conditional-gi promises would

be a knock-down argument against the orthodox theory of consideration. For if

there is ironclad consensus on any one proposition concerning the consideration

requirement, it is that it is not satisﬁed by donative promises, including condi-

tional ones.

One can hold on to the judgment that the aunt’s promise is sup-

ported by consideration only at the cost of abandoning all pretense that the mod-

ern consideration rule is an expression of a quid pro quo exchange requirement,

or by making believe that the aunt’s promise is not genuinely donative. In the

absence of a better rule of consideration, however, it is no surprise that the dra-

ers of the Second Restatement, committed as they are to the bargain require-

ment, have, in the face of counterexample, chosen to grin and bear it, resorting

to subterfuge and obfuscation.

The remuneration theory of consideration pro-

vides that better rule and thereby obviates the need for subterfuge. In the case

we have consi dered, neither the nephew’s acceptance of his aunt’s condition, nor

his subsequent fulﬁllment of it, constitutes payment either for the aunt’s gi or

that violin in a monthly private concert for the col lector and her friends, the resulting agree-

ment may surely qualify as a bargain and satisfy the consideration requirement, even though

it appears to fail Benson’s independence test. And if, for whate ver reason, it would not fail

Benson’s test, then neither would the aunt’s gi promise to her nephew, as the two cases share all

relevant features: in eac h case, the promisee promises to do something with that which the

promisor promises to give (whether money or violins). I may also note that Benson’s formu-

lation of his test, in the italicized sentence, seems to overlook the fact that it is the promisee’s

counterpromise (rather than subsequent performance) that is the consideration in bilateral

contracts. Aer all, Benson explicitly intends his test to rule out the oer to give a gi that is

made conditional on the promisee’s promise to accept the gi. However, there is no reason

in principle why the sequence of promises in such a case could not have been reversed: that is,

there is no reason that the donee could not have ﬁrst made a promise to accept a ce rtain gi

conditional on the donor’s counterpromise to give the gi. Accordingly, Benson must intend

for the independ ence requirement to apply to the promisee’s (promised) performance (even

in the bilateral case).

98. See supra note 95 and accompanying text.

99. The Second Restatement does not deal with this diculty in its most general form. However,

the comments do discuss the speciﬁc (and somewhat arcane) class of cases involving promises

to give a gi that are made conditional on the oeree’s return promise to accept the gi, some-

thing sometimes done (as the draers observe) when the gi carries substantial burdens and

responsibilities (e.g., a transfer of real estate):

[A] promise to make a gi is not made a bargain by the promise of the prospective

donee to accept the gi, or by his acceptance of part of it. This may be true even

though the terms of gi impose a burden on the donee as well as the donor. In such

cases the distinction between bargain and gi may be a ﬁne one, depending on the

motives manifested by the parties.

RESTATEMENT (SECOND) OF CONTRACTS § 71 cmt. c (AM. LAW INST. 1981) (citation omitted).

This treatment sheds no light whatsoever on the problem.

the yale law journal 129:690 2020

744

her promise to give it. This is true by the lights of our ordinary intuitions and is

borne out by the theory of exchange that was put forward in the previous Part.

Indeed, neither condition of the reciprocal-payment account of exchange is ful-

ﬁlled in this case. The nep hew’s purchase of art with the fun ds received from his

aunt fulﬁlls an obligation owed to his aunt, but it does not constitute the satis-

faction of a debt.

100

And, more obviously, since the aunt’s transfer of money is a

gi, a debt of gratitude survives the transaction.

2. Contract Modiﬁcations

I will now consider an example of an exchange that is wrongly classiﬁed as a

gratuitous agreement under the modern rule—one-sided contract modiﬁcations

and the preexisting-duty rule. The question raised by these cases is whether the

promise to do a thing, or the actual doing of it, may be a good consideration if

the party is already bound to do that thing in virtue of a prior contract with the

other part y. More speciﬁcally, where B threatens not to fulﬁll an obligation ex-

isting under a prior contract with A unless A promises to make some additional

payment that the original agreement did not require, the question is whether A’s

promise to pay the higher rate is supported by consideration.

101

I will limit my

focus to “fair and equitable” modiﬁcations called for in light of circumstances

“not anticipated by the parties when the contract was made.”

102

To take a stock

example, suppose B had a preexisting duty to construct a house for A, but due

to an unanticipated rise in the price of building material, performance of that

duty (at the original contract price) would be extremely costly and might even

place B’s business in peril. If A values B’s performance more highly than sh e does

a right of action against B, or for some other reason, A may well agree to pay

more than the rate or iginally agreed upon in order to secure B’s performance.

Satisﬁed with the modiﬁed terms, B go es on to build the house, and the question

100. Consider that his aunt would have no legitimate grievance if he had previously promised a

collector, in exchange for some pieces of art, that he would thereaer spen d all his disposable

income on the purchase of art. That his obligation to his aunt may be discharged by a perfor-

mance that also discharges the (debt) obligation to the collector indicates that the former ob-

ligation is not a (strong) debt obligation.

101. This formulation is meant to include cases where B says she won’t perform, and A responds

by sweetening the deal if B performs.

102. RESTATEMENT (SECOND) OF CONTRACTS § 89(a).

paid on both sides

745

le to consider is whether A’s promise to pay the higher rate is legally enforcea-

ble.

103

Following the opinion of Lord Ellenborough in 1809 in Stilk v. Myrick, and

for many years aer, the doctrine of consideration was wielded to deny enforce-

ment of the second promise, as A received no more, as a result of her promise,

than what was origin ally owed to her.

104

This holding gradually came to be

viewed as unjustiﬁed, as it was both contrary to commercial needs and unsup-

ported by higher moral values. As one commentator has put it, “[T]his rule is,

on the whole, that adjunct of the doctrine of consideration which has done most

to give it a bad reputation.”

105

Wishing to spare the law this embarrassment, the

draers of the Second Restatement, while arming the preexisting-duty rule,

106

put forward an exception to that rule that would allow for “fair and equitable”

contract modiﬁcations.

107

The Restatement explicitly treats its allowance of such

modiﬁcations as an exception not only to the preexisting-duty rule, but also to

the consideration requirement, and accordingly places the relevant rule under

the topic “Contracts Without Consideration.”

108

The comments rationalize the

exceptional treatment by cursory appeal to the functional justiﬁcation of the con-

sideration doctrine oered by Lon Fuller—functions that, the Reporters claim,

are served in the modiﬁcation cases at issue.

109

As I will show below, however,

103. The history of such cases is extremely complicated. For one slice of this history, see Kevin M.

Teeven, Development of Reform of the Preexisting Duty Rule and Its Persistent Survival, 47 ALA. L.

REV. 387 (1996).

104. Stilk v. Myrick (1809) 170 Eng. Rep. 1168; 2 Camp . 317. As explained earlier, there is no reason

to infer from Ellenborough’s brief remarks that he espoused Langdell’s deﬁnition of consid-

eration. See supra note 15.

105. Patterson, supra note 13, at 936. Of course, the critics of the preexisting-duty rule have never

disputed that the law needs a way of screening o those promises to pay a higher price that

have been induced by coercive or exploitative threats not to perform at the original rate. Ra-

ther, the critics maintain that the bargain requirement is too blunt a tool for the task, as using

it to deal with the coercive cases would also bar the fair and equitable ones. See, e.g., id. at 937

(“However, not all second bargains are induced by coercion; and it would be better (I submit)

in the long run to drop the rule as to a preexisting contractual duty and decide the grounds

for avoidance of each second bargain on its facts, i.e., by reference to coercion, deception, or

lack of good faith in cases where a special relation between the parties imposes such an obli-

gation.”).

106. RESTATEMENT (SECOND) OF CONTRACTS § 73.

107. Id. § 89.

108. Id. ch. 4, topic 2.

109. “As in cases governed by § 84, [the modiﬁcation’s] relation to a bargain tends to satisfy the

cautionary and channeling functions of leg al formalities.” Id. § 89 cmt. a; cf. id. § 72 cmt. c

(describing the cautionary and channeling justiﬁcations of the doctrine of consideration).

the yale law journal 129:690 2020

746

Fuller’s functional argument is not just implausible as a justiﬁcation of the doc-

trine of consideration, but, more importantly for pre sent purposes, it is incom-

patible with the prevailing reciprocal-inducement conception of the rule.

Although th e Restatement adopts the position that one-sided modiﬁcations

are unsupported by consideration, the Reporters record a contrary view, writing

that the allowance of fair and equitable modiﬁcations is “sometimes reached on

the ground that the original contract was ‘rescinded’ by mutual agreement and

that new promises were then made which furnished consideration for each

other.”

110

The Reporters’ implicit reference here is to a position taken by Ames,

who had inﬂuentially argued, many years earlier, that a consideration require-

ment cast solely in terms of exchange poses no obstacle to fair and equitable

modiﬁcations, provided that the modiﬁcation is characterized as a rescission.

111

On this cha racterization, when the parties assent to the modiﬁcation, they agree

to substitute a new contract (reﬂecting the higher, renegotiated rate) for the

original one, thereby rescinding the ﬁrst contract and forming the second in a

single showing of mutual assent. The Reporters rejected the rescission charac-

terization (though it is by no means obvious that they were correct to do so).

112

110. Id. § 89 cmt. b.

111. Ames, Unilateral Contracts, supra note 15, at 528-29.

112. Following Williston, the Second Restatement rejected the rescission characterization of the

modiﬁcation on the ground that the theory “is ﬁctitious when the ‘rescission’ and new agree-

ment are simultaneous.”RESTATEMENT (SECOND) OF CONTRACTS § 89 cmt. b. This charge of

ﬁction is hardly convincing, at least if the only alternative characterization is the one consid-

ered by Williston. This alternative involves conceiving of the modiﬁcation agreement as the

formation of a second, bonus contract that would supplement, but not replace, the original

contract, binding the promisor to pay a bonus if the original contract, still intact, is fulﬁlled

by the promisee. See Williston, supra note 31, at 31 (describing the modiﬁcation agreement as

a promise of “something additional” to “induce” the performance of the original contract).

While Williston endorsed this bonus characterization of modiﬁcations (and in doing so

sought to defend the preex isting-duty rule), he provided no reason why it is any more realistic

a construal of the parties’ intentions than the rescission characterization. Indeed, there are

modiﬁcations that are plainly incompatible with the bonus characterization. For such a char-

acterization is not possible unless paying the total renegotiated rate involves making (but go-

ing beyond) the payment that was originally required. However, this condition will not al-

ways hold. If, for example, the original agreement required payment of a certain quantity of

cultured pearls, and the renegotiated term required, instead, transfer of the same quantity of

natural pearls, Williston’s alternative “bonus” characterization would not be possible.

It is also worth noting that there is another alternative to the rescission characterization

that neither Williston nor Ames considered (as far as I am aware). On the alternative amend-

ment characterization, the modiﬁcation changes the terms of the original contract without ei-

ther replacing or supplementing it. The failure to consider this alternative perhaps reﬂected a

shared assumption (on the part of Williston and Am es) that a contract cannot survive a ma-

terial change in its terms. I will not separately discuss the amendment characterization in the

paid on both sides

747

But they took no clear stand on the question of whether a rescission characteri-

zation of the modiﬁcation entails, as Ames thought it did, that such modiﬁca-

tions satisfy the consideration requirement aer all.

Once the eort is made to apply the (Second Restatement’s) reciprocal-

inducement theory, however, it becomes clear that such a characterization of

modiﬁcation only supports Ames’s conclusions (ﬁnding consideration in all such

modiﬁcations) when the second agreement is unilateral; when the second agree-

ment is bilateral, applying the theory oen reaches the contrary result.

113

Let us begin with the unilateral case. Suppose B announces that, due to a

price hike in building materials, she is planning to breach; A responds by oer-

ing to pay a higher rate if B ﬁnishes the job; satisﬁed with the higher rate, B

ﬁnishes the job and demands payment. As I have said, the reciprocal-inducement

account reaches the right result in this case. The promise to pay the higher rate

is made in order to induce the performance, which is in turn rendered in order

to obligate the promisor to pay at the higher rate.

In the case of bilateral contracts, the analysis comes out dierently. Here, it

is not enough that A’s promise to pay the higher rate is made with the ultimate

aim of inducing the performance. Rather, according to the orthodox account of

consideration, each party’s promise in a bilateral contract is exchanged for the

other’s promise, so in order to satisfy the reciprocal-inducement account, A’s

promise to pay the higher rate must be made with the more immediate aim of

procuring B’s promise to perform. The diculty with ascribing the latter ai m to

A’s assent to the modiﬁcation, however, is that, at the moment immediately prior

to that act of assent, A already has B’s promise to perform: B promised to perform

in the original agreement, and the continued existence of the obligations and

claim rights that resulted from that agreement were (by hypothesis) never called

into question. Since B is already on the hook immediately prior to A’s promise

text, as all of my arguments concerning the rescission characterization apply, mutatis mutandis,

to the amendment characterization.

113. In making this argument, I am siding with Williston, who took issue with Ames’s conclusions

concerning the signiﬁcance of a rescission characterization of the modiﬁcation, on the ground

that “calling an agreement an agreement for rescission does not do away with the necessity of

consideration.” Williston, supra note 66, at 516. In reaching their respective views on the mat-

ter, neither Ames nor Williston engaged with the reciprocal-inducement conception of ex-

change. Ames spoke only of an exchange requirement, but, while using the Langdellian for-

mula, le the notion of exchange unanalyzed, never mentioning inducement. See Ames,

Bilateral Contracts, supra note 15, at 42 (“It is not yet too late to abandon this modern invention

and to return to the simple doctrine of the fathers, who found a consideration in the mere fact

of a bargain, in other words, in any act of forbearance given in exchange for a promise.”).

the yale law journal 129:690 2020

748

to pay at the high er rate, we cannot say that such a promise is made with the aim

(actual or apparent) of getting B on the hook.

114

What the foregoing analysis reveals is that proponents of the reciprocal-

inducement account can uphold the validity of one-sided contract modiﬁcations

only by either misapplying their deﬁnition of consideration or by drawing a

largely unprincipled exception to the consideration requirement.

115

Given these

choices, it is little wonder that many jurisdictions have refused to follow Section

89 of the Restatement, while others have relied on legislative intervention to ac-

complish what could not be achie ved otherwise. While treatise writers have long

proclaimed that “[t]he pre-existing duty rule is undergoing a slow erosion and,

as a general rule, is destined to be overturned,”

116

the rule stubbornly persists in

many jurisdictions.

117

It also persists, more widely, in specialized contexts, such

114. It is worth noting that a divergence between social and legal norms, regarding the eect of

the unanticipated event that precipitated the modiﬁcation, would complicate the analysis. For

example, if by the lights of prevailing social norms such events have the eect of extinguishing

the contractor’s obligation (i.e., if she wouldn’t be criticized for breaching in such conditions),

then the contractor’s recommitment might sensibly be sought aer as a means of ensuring

performance. Additionally, Kevin Davis has suggested to me that parties might enter into a

modiﬁcation agreement (at t

) that contemplates a two-stage, sequentially ordered process,

under which the rescission of the original contract (at t

) precedes the formation of the second

(at t

). Since, in this version, the modiﬁcation agreement contemplates a time where the

promisor has lost the original claim right but has not yet acquired the new one, one might

think that the promisor can enter into such an agreement with the aim of getting the claim

right back at t

. However ingenious, I do not think that such a restructuring of the agreement

would bypass the diculty, as the assent to such an agreement would still occur at a time (t

)

when the promisor still has the original claim right, which he would not risk losing if he were

to decline to enter into the modiﬁcation agreement. By way of analogy, if A were looking for

reasons to loan his bike to B for a day, we would not say (in the typical case) that A should

loan B the bike in order to get the bike back the following day. Getting the bike back is a con-

dition, not an aim, of the loan.

115. I set aside alternative bases of liability, such as reliance.

116. 2 JOSEPH M. PERILLO & HELEN HADJIYANNAKIS BENDER, CORBIN ON CONTRACTS § 7.1, at 342

(rev. ed. 1995) (emphases added). According to a more recent study, “[s]ome courts, in states

like Alabama, Minnesota, Mississippi, New Hampshire, and Wisconsin, have become so dis-

enchanted with the [preexisting-duty] rule that they have abandoned its application alto-

gether. Further, [only] ﬁve other states, California, Michigan, New York, Oklahoma, and

South Dakota, have eectively abolished by statute the pre-existing duty rule by providing

that a promise or agreement modifying a contract need not be supported by consideration, so

long as the modiﬁcation is in writing.” Corneill A. Stephens, Abandoning the Pre-Existing Duty

Rule: Eliminating the Unnecessary, 8 HOUS. BUS. & TAX L.J. 355, 362-63 (2008) (emphases

added).

117. The Supreme Court of the United Kingdom has recently clariﬁed, in dicta, that the preexist-

ing-duty rule articulated in Foakes v. Beer [1884] UKHL 1, 9 App. Cas. (HL) 605 (appeal taken

from Eng.) rema ins valid, though it is “probably ripe for re-examination.” Rock Advert. Ltd.

v. MWB Bus. Exch. Ctrs. Ltd. [2018] UKSC 24, [18], [2019] AC 119 at 131 (appeal taken from

paid on both sides

749

as the modiﬁcation of at-will employment contracts by employers.

118

In stark

contrast with the reciprocal-inducement theory of consideration, the remunera-

tion theory easily reaches the desired outcome in these cases.

119

For, according

to that theory, the element of consideration is found within the terms of the

agreement and not in the apparent motives that lead the parties to assent to those

terms. By providing their mutual assent to the change of terms, the parties assent

both to the rescission of one contract and the formation of another.

120

Since the

new one is, according to its terms, an exchange contract requiring payment for a

performance, it does not matter that the party undertaking the obligation to pay

at the higher rate lacks the aim of inducing the counterparty to assume an al-

ready-existing obligation. Mutual assent to an agreement that by dint of its

terms qualiﬁes as a bargain is sucient.

121

Eng.). Various jurisdictions in the United States continue to apply the preexisting-duty rule.

See, e.g., Johnson v. Seacor Marine Corp., 404 F.3d 871, 875 (5th Cir. 2005) (recognizing the

existence of the preexisting-duty rule in two-party cases); Airlines Reporting Corp. v. S & N

Travel, Inc., 58 F.3d 857, 864 ( 2d Cir. 1995) (noting that the performance of a preexisting duty

“cannot suce as consi deration for a valid agreement”); United States ex rel. Youngstown

Welding & Eng’g Co. v. Travelers Indem. Co., 802 F.2d 1164, 1167 (9th Cir. 1986) (“[I]n Ari-

zona, performance of a preexisting legal duty is not sucient consideration.”). See generally 3

SAMUEL WILLISTON & RICHARD A. LORD, WILLISTON ON CONTRACTS § 7: 3 6 n.1, at 664-70

(4th ed. 2008) (citing these and other cases).

118. For a general treatment, see Rachel Arnow-Richman, ModifyingAt-Will Employment Contracts,

57 B.C. L. REV. 427 (2016).

119. It should be clear, particularly in the case of modiﬁcations of at-will employment contracts,

that what is desirable is that the promises at issue be scrutinized only for fairness and volun-

tariness, not for consideration.

120. Although this formulation assumes the rescission characterization to be the correct one, the

remuneration theory does not rely on it. On the alternative amendment characterization, the

sole contract is an exchange contract both before and aer the amendment of the term.

121. In addition to contract modiﬁcations involving two parties, there has been considerable de-

bate about the application of the preexisting-duty rule to situations involving three parties. In

three-party cases, a promisor enters into an agreement to pay for a performance that the

promisee has already contracted with a third party to provide. In some such cases, the afore-

mentioned promisor was the intended beneﬁciary of the original agreement, who (on the

prevailing view of the legal rights of intended third-party beneﬁciaries) already acquired a

claim-right from the original agreement and who is therefore agreeing to pay more for a ser-

vice he is already owed. In a recent, stimulating article, Nico Cornell has argued at length that

we can only make sense of the authorities that ﬁnd consideration in such three-party cases by

positing a distinction between having a claim-right and being the party to whom an obligation

is owed. Nic olas Corn ell, The Puzzle of the Beneﬁciary’s Bargain, 90 TUL. L. REV. 75 (2015). In

Cornell’s view, while an intended third-party beneﬁciary of a contract is owed an obligation,

in that he would be wronged (and would have a cause of action) upon breach, he does not

acquire a claim right. Id. at 117-20. The remuneration theory of consideration, however, can

easily accommodate the holdings in question without resorting to such strained formalism.

In all three-party cases, as in the two-party variations considered above, the second agreement

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750

satisﬁes the consideration requirement just in case it is an agreement that contemplates an

exchange. As far as consideration is concerned, it makes no dierence whether the promisor

in question already had a preexisting claim-right to the service.

Cornell also misconceives the signiﬁcance of a relational conception of promissory obli-

gation for this body of law. There has been great development in the law concerning three-

party cases, which, in this country, has traveled roughly in the sa me direction as in the two-

party cases. While late nineteenth- and early twentieth-century American court s (unlike their

English counterparts) held that such performances, or promises to perform, would not qualify

as sucient consideration, the tide (at least among elites) began to turn aer Judge Cardozo’s

inﬂuential opinion in De Cicco v. Schweizer, 117 N.E. 807 (N.Y. 1917), and Corbin’s inﬂuential

article the following year, Corbin, supra note 45. Cornell accounts for these developments as

follows:

The central reason for this shi is a new understanding of rights and duties in a

relational way. Whereas the earlier rule [holding that the performance of, or

promise to perform, a preexisting duty does not count as good consideration for

a counterpromise , even in three-party cases] was based on the idea that the party

in question was under a [preexisting] duty to perform the promised act, the new

rule [ﬁnding consideration in such three-party cases] is based on the idea that

the party in question is . . . under a [preexisting] duty to the other party to perform

the promised act. In other words, once one shis from focusing on merely

whether the party in question is under a duty [simpliciter] and focuses instead

on whether the party is under a duty to the other party, the modern rule seems

much more natural. The new promise, even if it is redundant with regard to what

is required of the promisor, makes the requirement personal to the promisee in a

way that it was not before.

Cornell, supra, at 95 (omitting a “not” in the original text that is, in context, clearly an erra-

tum).

Cornell gives credit for this “new understanding” to Wesley Newcomb Hohfeld’s land-

mark work on legal relations: “This shi in perspectives may be considered Hohfeldian. As

already noted, it is no coincidence that the change in rules corresponds with the emergence of

Hohfeld’s work.” Id. at 96. See generally Wesley Newcomb Hohfeld, Some Fundamental Legal

Conceptions as Applied in Judicial Reasoning, 23 Y

ALE L.J. 16 (1913) (introducing a highly inﬂu-

ential theory of rights, duties, and other legal relations). Cornell’s account is at odds with my

understanding of the developments. As Cornell himself recounted in an earlier section, long

before Hohfeld’s seminal papers, as early as the late 1870s, Langdell and Pollock prominently

held that the promise to perform a preexisting duty counts as good consideration for a coun-

terpromise (i.e., in the bilateral case) even though the actual performance of that preexisting

duty would not (i.e., in the unilateral case). Cornell, supra, at 88-90. Their position in the

bilateral case was based explicitly on the relational idea that the second promise to perform

creates a new legal relation with the promisee, a relation that could qualify as a detriment

precisely because it was distinct from, and not entailed by, the relation created by the ﬁrst

promise to a dierent promisee. Id. As Co rnell puts it, “Discussing the case in which a party

promises to do what he has already promised another he will do, Pollock argued that the sec-

ond promise would be consideration because ‘[i]t purports to create a new and distinct right,

which must always be of some value in law.’” Id. at 89 (alteration in original) (quoting F

RED-

ERICK POLLOCK, PRINCIPLES OF CONTRACT AT LAW AND IN EQUITY 163 (Cincinnati, Robert

Clarke & Co. 1881) (1876)).

paid on both sides

751

Moreover, Langdell and Pollock’s position was rejected by Williston (the leading propo-

nent of the pre-1917 rule denying that consideration is given in three-party cases, whether

bilateral or unilateral) not because of any doubts about the relational claim (i.e., that the

promise to perform the preexisting duty, if valid, would create a new legal relation, distinct

from the ﬁrst, because owing to a dierent party) but because of the disparate treatment ac-

corded by Langdell and Pollock to unilateral and bilateral contracts: Williston thought it was

“intrinsically unreasonable that a promise of an act should ever be regarded as greater value

by the law than actual performance of that very act.” Williston, supra note 66, at 524. Whatever

its merits, this position plainly had nothing to do with a failure to perceive that the legal rela-

tions contemplated by the second promise were not equivalent to those created by the ﬁrst

promise and thus had nothing to do with a failure to grasp the relational character of promis-

sory obligations. (We may surmise that it stemmed from Williston’s doomed eort to at once

retain the idea that consideration (always) stands in an exchange relation to the promise, and

that the exchange relation is a relation of reciprocal payment. See supra note 45. For, without

taking a position on the matter, it does seem at least odd to say that a promise to do some-

thing could be acceptable payment when actually doing it could not be—such a position

would seem to imply, as Williston observes, that “a bird in the hand is worth less than [the

same] bird in the bush.” Williston, supra note 66, at 525 (alteration in original) (quoting Bal-

lantine, supra note 91, at 427, although the metaphor was in fact ﬁrst used in this context by

Ames, Bilateral Contracts, supra note 15, at 40).)

Finally, I may observe that the only element that is clearly owing to Hohfeld in Corbin's

argument that consideration is present in three-party preexisting-duty cases—a debt Corbin

himself records—has little to do with the relational character of promissory obligations, and

is also the weakest part of Corbin’s inﬂuential argument in support of the modern rule. See

Corbin, supra note 45, at 371 & n.16. Williston had claimed, with Langdell and Pollock, that

performance of a preexisting duty does not count as good consideration on the ground that

such performance does not constitute a legal detriment. See Williston, supra note 31, at 27.

Corbin argued for the oppo sing vie w (i.e., that performance of a duty does constitute a detri-

ment to the performer) on the ground that such performance entails a surrender of two “legal

powers,” a power to wrongfully breach a contract (a “power” one surrenders on the ground

that one can no longer wrongfully breach a promise that one has already fulﬁlled) and a power

to make an oer of rescission to the pro missee (since one cannot ask the promisee to waive a

promissory obligation one has already fulﬁlled). Corbin, supra note 45, at 371-72. The ﬁrst

“power” rests on Hohfeld’s overly broad characterization of legal power as a mere ability to

do something that would aect one’s legal relations with another. See Hohfeld, supra, at 44.

Those otherwise attracted to Hohfeld’s scheme have recognized that this is too loose and deny

that a promisor has a power to wrongfully breach. See, e.g., Joseph Raz, Voluntary Obligation s

and Normative Powers, 46 P

ROC. ARISTOTELIAN SOC’Y 79, 80-81 (1972). The second idea, like

the ﬁrst, is not just risible but mistaken even by the lights of a proper Hohfeldian analysis. For

in many cases, when performance must be rendered at a given time, one would lose this power

to oer rescission at that time regardless of whether one performs or breaches. (For example,

if A has contracted with B to wash B’s car at a given time, and A breaches, A cannot then

proceed to oer rescission.) And if one would lose the relevant power regardless of whether

one performs, we cannot say of one’s performance that it constitutes a legal detriment on ac-

count of the power one has lost.

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752

3. The Rationale of the Consideration Requirement

As I have said, the Second Restatement endorses Fuller’s functional justiﬁ-

cation for the consideration doctrine and appeals to those functions to justify the

exceptions it recognizes. I will criticize this approach by showing that Fuller’s

justiﬁcation is not open to proponents of the reciprocal-inducement view, and in

the course of doing so, I will also cast doubt on that justiﬁcation more gener-

ally.

122

I am, of course, hardly alone in failing to be convinced by prominent ex-

tant justiﬁcations of the rule; indeed, the doctrine has come under much ﬁre for

lacking any plausible rationale whatsoever. In an impo rtant paper, T.M. Scanlon

argues that the grounds that confer legitimacy on the practice of enforcing con-

tracts “provide[] no moral basis for the idea that [consideration] is always re-

quired.”

123

And in a seminal discussion, Charles Fried accuses the doctrine of

being “internally inconsistent” on the grounds that it abstains from regulating

the adequacy of contract terms, thereby “arm[ing] the liberal principle that

the free arrangements of rational persons should be respected,” but it restricts

the class of enforceable promises to bargain promises, thereby “hold[ing] that

individual self-determinati on is not a sucient ground of legal obligation.”

124

And suce it to say that the evaluation of the doctrine by legal economists has

been similarly grim.

125

All the opprobrium is, I believe, well-earned when

heaped at the modern co nception of consideration as reciprocal inducement.

However, following my discussion of Fuller, I will show that the remuneration

theory can do substantially better on this score insofar as it can be rationalized

122. For additional criticism of Fuller, see Andrew Kull, Reconsidering Gratuitous Promises, 21 J. LE-

GAL STUD. 39 (1992).

123. T.M. Scanlon, Promises and Contracts, in THE THEORY OF CONTRACT LAW:NEW ESSAYS 86, 107

(Peter Benson ed., 2001).

124. CHARLES FRIED,CONTRACTS AS PROMISES: A THEORY OF CONTRACTUAL OBLIGATION 35 (1981).

125. As a recent handbook chapter by leading ﬁgures in the ﬁeld puts it:

Although its grounding in exchange would seem to suggest a close connection be-

tween the consideration doctrine and the promotion of economic welfare, the doc-

trine would seem to diverge from simple eciency in at least two respects. First,

many nonexchange promises also enhance economic welfare. A donor’s commit-

ment to make a gi, for example, enables the beneﬁciary to engage in speciﬁc an-

ticipatory investment, thus lowering the donor’s cost of providing the beneﬁciary

with any given level of utility. Second, the lawyer’s understanding of what counts

as an exchange [in the context of the law of consideration] is narrower in practice

than an economist’s would be.

Benjamin E. Hermalin, Avery W. Katz & Richard Craswell, Contract Law, in 1 HANDBOOK OF

LAW AND ECONOMICS 3, 50 (A. Mitchell Polinsky & Steven Shavell eds., 2007) (citations omit-

ted).

paid on both sides

753

by an intelligible, historically compelling functional explanation that the domi-

nance of the reciprocal-inducement conception has obscured.

In a classic paper, Fuller argued that the bargain requirement serves three

rationalizing functions, which it shares with legal formalities such as a seal: an

evidentiary function, insofar as commitments made in the course of an exchange

are more likely than other kinds of commitments to leave an evidentiary trail in

their wake; a cautionary function, insofar as commitments made in the course

of an exchange are less likely than others to be made rashly or imprudently; and

a channeling fu nction, insofar as we can infer from the exchange context that the

parties intended to create legally binding relations.

126

The conception of ex-

change that under writes Fuller’s functional claims does not seem to have been

made explicit, but it is one of a voluntary, cooperative arrangement between in-

dividuals who do not trust each other, in the sense that neither can assume that

the other is solicitous of his interests or disposed to honor promises in the ab-

sence of external incentive.

127

Such individuals would ente r into a cooperative

scheme most guardedly, only aer scrutinizing the terms and taking precautions

to provide the ot her party with self-int erested reasons to conform to the deal.

For these reasons, the thought must go, they will exercise caution before com-

mitting (cautionary), keep records of the agreed-upon terms (evidentiary), and

recruit a coercive enforcement mechanism to supply the necessary incentive

(channeling). The grounds, in turn, for ascribing these attitudes of mistrust to

the exchanging parties is that the resort to bargain as a mode of performing ben-

eﬁcial services (whereby I condition my willingness to serve you on the prospect

of receiving something in return) itself indicates the absence of robust social or

aective ties that are prerequisites for the relevant species of trust.

Fuller’s functional justiﬁcation is hardly convincing. Whatever truth there

once was to the claim that we do not record our nonexchange commitments

(e.g., our commitments to plans, or our promises to give gis or perform fa-

vors), this no longer holds in our age of electronic communication. Moreover,

the idea that we do not enter into exchange agreements imprudently is given the

lie by a moment’s reﬂection on consumer contracts, where it is precisely the al-

lure of a tempting product or experience th at leads so many of us to incur debts

126. Fuller, supra note 17, at 800-01. For a more recent elaboration and defense of Fuller’s func-

tional explanation, see Melvin Aron Eisenberg, Donative Promises, 47 U. CHI. L. REV. 1 (1979);

and Melvin Aron Eisenberg, Principles of Consideration, 67 CORNELL L. REV. 640 (1982) [here-

inaer Eisenberg, Principles of Consideration].

127. It will not be lost on readers that such a conception coheres very nicely with the genealogical

account of exchange oered by Hume and Smith, considered (and rejected) above. See supra

notes 63-64 and accompanying text.

the yale law journal 129:690 2020

754

that we would be better o avoiding. Finally, setting aside nominal considera-

tion, it is dicult to seriously defend the view that we can infer (even to the

extent necessary to support an empirical generalization) an intent to establish

legal relations merely from one’s participation in an exchange transaction. In

particular, the idea that parties to an exchange transaction would not, in general,

rely on one another and so would not enter into exchange relations with one

another, absent a belief that their agreement could be legally enforced, is at odds

with a growing mountain of evidence testifying to alternative bases of commer-

cial trust.

128

Quite apart from these general diculties, however, there are special reasons

that bar proponents of the reciprocal-inducement account from appealing to

Fuller’s justiﬁcations. For the agreements and commitments that satisfy the con-

ditions of reciprocal inducement apply to a very wide range of agreements made

in personal (that is, social and domestic) contexts, as well as among members of

preexisting cooperative units more generally (whether business or domest ic), all

of which enjoy the kind of ties that are at odds with the attitudes of mistrust that

Fuller’s account relies on. We have already observed that (conditional) gi

promises would oen satisfy those conditions, but this is the least of what I have

in mind. In order to glimpse the problem, we need only reﬂect on the many oc-

casions friendship and family life aord for collaboration and coordination.

Many of these involve commitments to mutually beneﬁcial plans of action. In

many of these cases (particularly those involving games with multi ple equilibria,

to adopt a dierent parlance) the commitments will be made conditionally, via

the familiar process of oer and acceptance, and will also satisfy the reciprocal-

inducement condition, insofar as each party commits in part as a means of get-

ting the other party to commit to the mutually beneﬁcial plan. Many signiﬁcant

plans regarding the divvying up of resources or labor would ﬁt the bill, at least

in cases where coordination between the parties is desired. So, too, would com-

mitments to coordinate signiﬁcant activities, including ones we have already

considered in Part II. Recall the two close friends, A and B, who are entertaining

the prospect of enlisting in the army. Each would rather enlist in the army to-

gether than not enlist at all; but each would also rather not enlist than enlist

without the other. In such circumstances, the two may well commit to a plan

128. See, for example, the literatures spawned by Lisa Bernstein, Opting out of the Legal System:

Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115 (1992 ); and

Stewart Macaulay, Non-Contractual Relations in Business: A Preliminary Study, 28 AM. SOC.

REV. 55 (1963). See generally ROBERT C. ELLICKSON, ORDER WITHOUT LAW: HOW NEIGHBORS

SETTLE DISPUTES (1994).

paid on both sides

755

according to which each will enlist.

129

If we are to say that such commitments

are supported by consideration, as any proponent of the reciprocal-inducement

account must, this rules out, even prima facie, the empirical generalizations that

Fuller makes to justify the doctrine.

130

For these reasons, conceptualizing con-

sideration as reciprocal inducement deprives the consideration requirement of a

rationale and renders the exceptions to it ad hoc.

131

129. To be clear, I need not say (as some philosophers would) that the adoption of every joint,

mutually beneﬁcial plan is accompanied by an implicit or explicit commitment to abide by its

terms, only that many are. In recent times, Margaret Gilbert has prominently analyzed shared

agency in terms of commitments on the part of the parties. See MARGARET GILBERT, What Is

It for Us to Intend?,in SOCIALITY AND RESPONSIBILITY: NEW ESSAYS IN PLURAL SUBJECT THEORY

14,19-22 (2000). Michael Bratman, who has provided an alternative analysis of shared agency,

nonetheless explicitly maintains that such commitments are oen made, implicitly or explic-

itly. See MICHAEL BRATMAN, SHARED AGENCY: A PLANNING THEORY OF ACTING TOGETHER

107-20(2014). We would expect commitments when the stakes, as well as the costs of chang-

ing plans midcourse, are suciently high.

130. I take it that Fuller would not have seen this as an objection to his view, because, as far as I

know, he did not endorse reciprocal inducement as an account of exchange.

131. Daniel Markovits has recently oered a defense of the received consideration doctrine. See

Daniel Markovits, Contract and Collaboration, 113 YALE L.J. 1417 , 1477-91 (2004). I said earlier

that normative (like positive) analyses of the consideration doctrine have suered from a fail-

ure to stay trained on the central notion of exchange, and Markovits’s brave eort at justifying

the unpopular doctrine is, I believe, an instructive example. Aer arguing that “the morality

of contract derives from the value of the collaborative community that contracts engender”—

more fully, that it derives from the fact that “[c]ontracts establish relations in which persons

do not just negatively refrain from using each other merely as means but also, and arma-

tively, treat each other as ends in themselves”—Markovits aims to leverage this analysis to

explain the consideration requirement. Id. at 1482. Although he recognizes that this aim re-

quires him to distin guish between bargain promises and gratuitous ones on collaborative

grounds, I submit that the account of collaboration he oers does not allow him to do so, as

the relevant species of collaboration does not cleave to only one side of the line dividing ex-

change agreements and gratuitous promises. Quoting James Penner, Markovits observes that

“bargains are bilateral” in the sense that they relate to “mutual decisions—that is, decisions

made by more than one person—and they each concern ‘joint’ projects or concerns of some

kind where the parties each participate to some extent in whatever the agreement contem-

plates.” Id. at 1482-83 (quoting J.E. Penner, Voluntary Obligations and the Scope of the Law of

Contract, 2 LEGAL THEORY 325, 329 (1996)). Even if Markovits were to embrace the conclusion

that the nondonative collaborative agreements highlighted above (e.g., “I’ll enlist if you’ll en-

list”) satisfy the consideration requirement, he would presumably not dispute that gi prom-

ises (including promises to do the promisee a favor) fail the consideration test. But if Mar-

kovits’s (previously quoted) characterization of bargains does not apply to all gi promises,

it at least applies to the very many of them that result from the acceptance of oers to, or

requests for, help, and that concern a joint activity (e.g., when you agree to pick me up from

the airport or to help me move my house next Saturday aer I ask for your help). Moreover,

once such a commitment has been made, it gives rise to a “scheme of interlocking intentions,”

underwritten by an assumed obligation, that should invoke Markovits’s “collaborative ideal”

the yale law journal 129:690 2020

756

Once the traditional conception of bargain is recovered, however, and the

consideration requirement is accordingly revised, an intelligible rationale quickly

emerges. The point of the consideration rule, properly conceived, is to keep con-

tract in its place ; more speciﬁcally, the function is to invalidate promises and

commitments made in personal, intimate contexts when the parties to such

agreements have not expressly manifested an intention to establish legal rela-

tions.

132

Although this function is, I beli eve, the most intelligible and historically

compelling rationale for the doctrine of consideration that can be oered, it rests

on a number of controversial premises that I do not mean to defend, only to

reveal.

I begin with the connection drawn by Samuel Williston between the consid-

eration requirement and the requirement of intent to establish legal relations:

In a system of law which makes no requirement of consideration, it may

well be desirable to limit enforceable promises to those where a legal

bond was contemplated, but in a system of law which does not enforce

no less than the case of valid enforceable contracts. Id. at 1483. Furthermore, no less than bar-

gains, such gratuitous commitments “are in their nature wanted by, and invoke the intentions

of, all participants”—aer all, barring undue pressure (a possibility that does not distinguish

gratuitous from bargain promises), why would the favor have been oered (or requested) and

accepted if it was not wanted by the participants? Id. To be sure, it is not true of all gi prom-

ises that they give rise to mutual obligations, that is, that “[e]ach party to a bargain expressly

intends to give the other authority to require performance, and [that] each party expressly

intends to exercise the authority that she enjoys in this connection.” Id. However, as we have

seen in the case of the aunt and the art-collecting nephew, many conditional gi promises do

involve mutual obligations. Moreover, on the traditional analysis, unilateral (exchange) con-

tracts (for example, a contract that is formed by a payment of ten dollars that is made in ac-

ceptance of a prior oer to serve the payor a sandwich upon receipt of ten dollars) are equally

marked by a one -sided relation of obligation, yet satisfy the conside ration requirement. (In-

deed, it is partly on account of such unilateral contracts that modern commentators have re-

jected a “mutuality of obligation” requirement. See 2 P

ERILLO & BENDER, supra note 116, § 6.1,

at 196-212.)

132. I allude to Stephen Hedley’s important article, Keeping Contract in Its Place—Balfour v. Balfour

and the Enforceability of Informal Agreements, 5 OXFORD J. LEGAL STUD. 391 (1985). Hedley ar-

gues persuasively that the entire function (as well as operational content) of the English legal-

intent requirement is to bar enforcement of (informal) social and domestic promises. Alt-

hough it serves to corroborate his account, Hedley fails to notice the role played by the doc-

trine of consideration in the develop ment of the legal-intent requirement. As I explain below,

the English did not adopt the legal-intent requirement until (Pollock’s version of) Langdell’s

deﬁnition of consid eration took root, at which point consideration could no longer fulﬁll the

relevant function. Hedley’s account of the legal-intent requirem ent is echoed by Stephen

Smith in the latter’s justiﬁcation of the legal-intent requirement. SMITH, supra note 24, at 213-

15.

paid on both sides

757

promises unless some [consideration] has been asked [for] and given,

there is no propriety in such a limitation.

133

In a post-Fullerian age, it is all too easy to read these remarks as reﬂecting the

position that consideration serves as a proxy for a promisor’s intent to establish

legal relations, and that this justiﬁes the doctrine. However, as a matter of inter-

pretation, this would be a mistake, for Williston clariﬁes that it would be “un-

fortunate” to let the validity of a promise “depend upon the accident of the prom-

isor’s reﬂection on his legal situation.”

134

In any case, Fuller’s proxy claim is, as

I have already observed, unconvincing. But there is a better argument in the vi-

cinity, one that is suggested by Williston’s remarks. The rationale that I ascribe

to the doctrine of consideration assumes the background legal regime that Wil-

liston describes: speciﬁcally, it assumes that an intent to be legally bound is not

required as a condition of contractual liability, even if manifested intentions not

to be legally bound will be eective. By stating that the rationale for considera-

tion assumes this rule, I do not mean that I assume such a rule to be defensible—

again, as with the other assumptions that I will go on to discuss, I take no stand

on the matter. Rather, I mean only that the most plausible and attractive rationale

for the consideration requirement takes the background rule for granted.

135

The explanation I put forward conceives of the consideration doctrine as a

proxy rule and rests on the general view that the transactional forms that we

employ when performing beneﬁcial services to others are profoundly sensitive

to social context and relationship type.

136

More speciﬁcally, it rests on the empir-

ical and sociological claim that we tend not to resort to quid pro quo transactions

in personal, intimate contexts. In the context of fr iendship and family, we tend

to resort to other modes of reciprocity and mutuality. Although there are modes

133. 1 WILLISTON, supra note 11, § 21, at 21-22. Williston is here drawing from a footnote in his

earlier 1914 paper. Williston, supra note 66, at 506-07 n.13. His substitution of “propriety” for

the earlier “necessity” is most revealing.

134. 1 WILLISTON, supra note 11, § 21, at 22.

135. There are two further remarks worth making. First, we may surmise that this is why Scanlon

was unable to ﬁnd more to say on behalf of the consideration requirement, see supra note 123

and accompanying text, for his discussion explicitly assumes a scheme of contract law that

imposes a legal-intent requirement. Scanlon, supra note 123, at 104. Second, it is perhaps

worth emphasizing that the “English rule” requiring legal intent is, according to our leading

historians, a late nineteenth-century phenomenon that wasn’t accepted by the English courts

until 1919. See, e.g., IBBETSON, A HISTORICAL INTRODUCTION, supra note 2, at 233 (“It did not,

however, reach the doctrinal heartland until it was borrowed by Pollock from Savigny and

incorporated in his textbook in 1876.”).

136. This general view has been inﬂuentially propounded by Viviana Zelizer. See VIVIANA A.

ZELIZER, THE PURCHASE OF INTIMACY (2005).

the yale law journal 129:690 2020

758

of exchange that are characteristically “friendly” (e.g., individualized discounts,

or oers of ﬁrst refusal, extended to friends as favors), friends are generally re-

luctant to characterize their services to one another in quid pro quo terms, and

it would oen be galling to respond to a favor request from a friend with a quid

pro quo co unteroer, even in contexts when it woul d be acceptable to refuse the

request outright.

It is worth contrasting this sociological claim—an empirical generalization—

with a similar one familiar from the economic literature on donative promising.

Several classic papers in the law and economics tradition have suggested that the

law might assume that donative promises are generally conﬁned to intimate con-

texts and that this might explain the law’s reluctance to enforce such promises,

given the availability of less costly extralegal enforcement mechanisms.

137

The

empirical proposition I rely on is subtly, yet importantly, dierent. Rather than

attributing to the law the view that gratuitous promises (that is, nonexchange

commitments, whether donative or not) tend to occur only among intimates, I

am attributing to it the view that quid pro quo exchanges tend not to occur

among intimates.

138

Moreover, although I put this forward as an empirical and

137. Richard Posner, for example, has surmised that “the real reason for the law’s generally not

enforcing gratuitous promises is . . . an empirical hunch that gratuitous promises tend . . . to

be made in family settings where there are economically superior alternatives to legal enforce-

ment.” Richard A. Posner, Gratuitous Promises in Economics and Law, 6 J. LEGAL STUD. 411, 417

(1977). Similarly, Charles Goetz and Robert Scott have put forward the view that “[e]xtra-

legal sanctions are likely to be eective in the donative context because promisors generally

care about the welfare of promisees. In contemplating a promise, the promisor may regard

costs suered by the promisee as equivalent to costs suered by himself.” Charles J. Goetz &

Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 YALE L.J. 1261,

1304 (1980). The empirical claim is also sometimes put forward by those outside the law and

economics tradition. See, for example, Eisenberg’s observation that “[a]n inquiry into ingrat-

itude involves the measurement of a maelstrom, because many or most donative promises

arise in an intimate context in which emotions, motives, and cues are invariably complex and

highly interrelated.” Eisenberg, Principles of Consideration, supra note 126, at 662. Similarly,

Mindy Chen-Wishart has rece ntly oered a defense of consideration centered around the

claim that “[g]ratuitous promises are normally embedded in a framework of ongoing [per-

sonal] relationships with normative implications, which provide the code for interpreting the

signiﬁcance of acts and omissions.” Mindy Chen-Wishart, In Defence of Consideration, 13 OX-

FORD U. COMMONWEALTH L.J. 209, 223 (2013).

138. It is likely that the economists are tacitly assuming my empirical generalization as well. At the

very least, if our exchange promises to friends and family were to swamp our donative ones,

then even if their empirical thesis about donative promises were correct, it would not be clear

that the administrative costs of applying a bar against donative promises would outweigh the

savings to which they refer. See supra note 137. Relatedly, it would seem that anyone endorsing

the Fullerian proxy discussed earlier also presupposes my empirical claim. For the assumption

on which that proxy rests—as discussed previously—seems to fail most obviously in intimate

contexts, contexts which are of course chock-full of commitments.

paid on both sides

759

sociological generalization, susceptible to falsiﬁcation and contingent upon val-

ues that might not be endorsed universally, I do not merely oer it as an “empir-

ical hunch.”

139

The theory of quid pro quo exchange that was put forward in Part

II went some of the way toward explaining why friends and family oen have

reason to be squeamish about quid pro quo exchange notwithstanding its great

potential to distribute goods and services in mutually beneﬁcial ways.

I will not attempt to deﬁne the notion of personal, intimate relationship to

which I have appealed. Indeed, it is in part because the notion (unlike the some-

what more restrictive “family”) does not lend itself to ready deﬁnition that the

law might have reason to prefer a proxy rule.

140

Two other factors would appear

to weigh in favor of using a proxy rule instead of a more direct one. First, alt-

hough I will not argue the point, the burdens that a more direct rule would place

on courts in determining, and on individuals in clarifying, the nature and quality

of personal relationsh ips would seem to coun t in favor of a proxy. Second, and

more importantly, a more direct rule that invoked the notions of friend and fam-

ily would have greater diculty bracketing o those occasions, not necessarily

infrequent, where friends and family members confront one another, appropri-

ately, at arm’s length in the marketplace. In other words, it would have greater

diculty restricting the rule to those instances where family and friends are not

merely engaging with one another but doing so as family and friends. Indeed,

although I do not myself go so far as to endorse the claim, some might see the

use of the exchange form as not merely indicative, but also partly constitutive, of

a nonintimate context. To the extent that one does hold such a view, the bargain

rule would amount to more than a proxy that merely tracks, however inexactly,

important social divides; on such a view, the rule coul d be viewed instead as one

that carves up our social world directly at the joints.

Given the foregoing, I submit that the reasons that justify, or at least expla in,

the consideration rule are the same as the apparent reasons we have to eectively

replace the background rule regarding legal intent with the contrary rule (one

that requires the manifestation of legal intent as a condition of liability) when it

139. Posner, sup ra note 137, at 417.

140. It is worth noting that the Supreme Court, in Salman v. United States, 137 S. Ct. 420 (2016),

has recently adopted a rule in the law of insider trading that turns on whether the recipient of

a tip from an insider (i.e., “tippee”) is a “trading relative or friend,” thereby using a direct

nonproxy rule to demarcate the personal, intimate space. Id. at 427-28. However, it is note-

worthy that there has been considerable uncertainty about how this term will or ought to be

construed. In particular, although the Court, in Salman, extensively di scussed a recent Second

Circuit decision, United States v. Newman, it conspicuously failed to express a view about how

its holding would apply to the facts in that case, involving tips by insiders to fellow congre-

gants of a church as well as to professional acquaintances. See Salman, 137 S. Ct. at 425 (citing

United States v. Newman, 773 F.3d 438 (2d Cir. 2014)).

the yale law journal 129:690 2020

760

comes to those promises and agreements made in personal, intimate contexts.

That is, the consideration requirement rests on the view that commitments made

in these contexts should not be legally enforceable when the parties do not ex-

pressly manifest a contrary intent. I will not argue for such a view, except to say

that I do not believe that its appeal derives only, or even primarily, from consid-

erations such as the availability of cheaper enforcement mechanisms or the dif-

ﬁculties involved when outsiders must interpret the agreements of intimates.

141

Furthermore, it is worth emphasizing that the opt-out provision—which gives

intimates a meaningful opportunity to voluntarily assume legal obligations to

one another if and when they choose to do so—is an important element of the

justiﬁcation. To once again quote Williston, “It is something, it seems to me,

that a person ought to be able to do, if he wishes to do it—to create a legal obli-

gation to make a gi. Why not? . . . I don’t see why a man should not be able to

make himself liable if he wishes to do so.”

142

The force of these words does not

diminish in the slightest when applied to the personal domain. Moreover, the

costs of adopting a proxy rule rather than a direct one—in particular, the eects

of this design choice on gratuitous commitments (donative and nondonative

alike) that are made outside of personal contexts—are mitigated substantially by

provisions allowing individuals to legally bind themselves if and when they

choose to do so. In this connection, it is worth highlighting that the considera-

tion rule has historically always operated alongside the availability of formalities

(such the seal or nominal consideration) that allow individuals easy and aord-

able ways to voluntarily assume legal obligations.

143

To the extent that the wide-

spread ban on nominal consideration in the United States (but not elsewhere in

the common-law world), together with the fairly rece nt abolishment of the seal

141. While I will not make the case, other obvious factors to consider include our distinct interests

in the reasons for which commitments are honored in this domain, as well as the much more

vexed question concerning the domain’s appropriate and desirable degree of insulation from

state interference. Mindy Chen-Wishart has recently argued in favor of this special treatment

of agreements in the private domain. See Chen-Wishart, supra note 13 7. The view has also

been subjected to a feminis t critique, in connection with the English requirement of legal in-

tent, in Mary Keyes & Kylie Burns, Contract and the Family: Whither Intention?, 26 MELB. U. L.

REV. 577, 585-87 (2002). It is worth noting that the feminist critique (of the legal-intent re-

quirement) is oen centered around cases of quid pro quo exchanges between spouses. Since

these agreements would satisfy the doctrine of consideration, such considerations provide ad-

ditional reason for preferring the proxy rule.

142. SAMUEL WILLISTON, HANDBOOK OF THE NATIONAL CONFERENCE OF COMMISSIONERS ON UNI-

FORM STATE LAWS AND PROCEEDINGS 194 (1925).

143. From its sixteenth-century origins, the consideration requirement only applied to simple con-

tracts (i.e., those not under seal). As Simpson has explained, using the seal at that time was

as easy and cheap as ﬁ xing a signature to a document is today. See SIMPSON, supra note 2, at

90.

paid on both sides

761

in many jurisdictions, has eectively eliminated this possibility, the rationale I

have ascribed to the doctrine provides the basis for a criticism of these develop-

ments and a call for reform.

144

A second way of mitigating the costs of using a proxy to demarcate spheres

of interaction involves allowing exceptions, and the rationale I have oered for

the doctrine allows us to do so on a principled basis. That rationale does not

extend to those types of commitments that, while strictly gratuitous, are both

infrequently used by friends and family in their dealings with one another and

describable in general terms that do not directly invoke the notions of friends or

family. A case in point concerns the law’s treatment of innovative mercantile and

banking transactions, such as the bill of exchange in the seventeenth century.

145

Once we appreciate the rationale of the consideration rule, we can recognize the

law’s willingness to enforce such transactions for what it is: a principled excep-

tion to the consideration rule rather than an unprincipled concession owing to

pressures from the commercial class or the economic needs of the hour. The same

rationale can also be used to explain the validity of a promise to serve as a surety

or guarantor for a debtor. Such guarantee agreements oen involve genuine ex-

changes (as when, in exchange for the guarantee, the creditor agrees to extend

funds or to forbear from suing the debtor), but when they do not they may still

be enforced on the assumption that the relationship between surety and creditor

(as opposed to surety and debtor) is rarely an intimate one. Finally, a principled

exception can also be drawn for ancillary or collateral commitments, such as ﬁrm

oers inv olving an oeror’s promise not to rescind his or her exchange oer for

a given time, on the ground that such commitments inherit the relevant proper-

ties of the underlying exchange oer—in other words, if an oer is unlikely to

be made in a personal context, then so is the promise not to rescind such an

oer.

146

144. On the seal and nominal consideration in U.S. jurisdictions, see GREGORY KLASS, CONTRACT

LAW IN THE UNITED STATES 74-75, 88-89 (2d ed. 2012).

145. See IBBETSON, A HISTORIC AL INTRODUCTION, supra note 2, at 204 (“The bill of exchange nor-

mally arose in the following situation: X owed money to Y; X gave to Y a bill drawn on Z; Y

took the bill to Z, who accepted it thereby agreeing that he would pay it. If Z refused subse-

quently to pay, Y would wish to bring an action against him. So long as X had been acting as

Z’s agent, this form of transaction created no diculty: the acceptance of the bill did no more

than concretize the obligation that already existed. The problem arose if there was no such

agency relationship, for it could be objected that the acceptor, Z, had not received any consid-

eration. From the early years of the seventeenth century actions in assumpsit are found against

such acceptors in this type of case . . . .” (footnote omitted)).

146. Of course, this is just put forward as an empirical generalization compatible with occasional

exceptions.

the yale law journal 129:690 2020

762

Similarly, the rationale allows us to respond to the claim that the bargain

theory, at least as an interpretation of the historical doctrine, “leads to a strained

emphasis upon the commercial element in contract law (for not all important

contracts are commercial).”

147

Elaborating on this idea, A.W.B. Simpson argues

as follows:

It is natural to seek, behind the rules of law, for some general explanation

in terms of contemporary social conditions or ideas, and this is right.

Hence it has been suggested, notably by Mr . Fifoot, that the evolution of

the doctrine of consideration reﬂects the idea that the courts should only

hold commercial agreements actionable, and concern themsel ves with

the bargains of businessmen . . . . Direct evidence for his view is not to

be found, and indirect evidence hardly supports it; it hardly seems to be

the sort of idea which sixteenth-century men would ﬁnd appealing. The

courts dealt with cases involving commerce, though the contractual in-

strument of the commercial world was the bond, not the informal prom-

ise . . . . More radically, the view that the law of contract is the handmaid

of commerce seems to me to be mistaken if it is opposed to the view that

the law of contract expresses, in a form thought appropriate (bearing in

mind the practicalities of litigation), moral ideas. For commerce, like

other areas of life, must be conducted morally if the general good is to be

furthered, and there is no special set of principles of commercial moral-

ity.

148

The rationale of the bargain theory that I have oered renders it immune to

these charges, since it purports to justify the doctrine not by appeal to commer-

cial needs or interests, but rather to the signiﬁcance of valuable personal rela-

tionships. Nevertheless, despite (or precisely because of) this overarching justi-

ﬁcation, the doctrine also serves to explain why certain commercial transactions

that do not meet the letter of the rule should nevertheless receive exceptional

treatment.

149

Finally, this functional exp lanation allows us to answer Fried’s charge, noted

above, concerning the doctrine’s internal consistency. The reason the doctrine

147. SIMPSON, supra note 2, at 417.

148. Id. at 487- 88.

149. By the same toke n, it justiﬁes the Uniform Commercial Code’s willingness to discard the con-

sideration requirement altogether. See, e.g., U.C.C. § 2-205 (AM. LAW INST. & UNIF. LAW

COMM’N 2017) (“An oer by a merchant to buy or sell goods in a signed writing which by its

terms gives assurance that it will be held open is not revocable, for lack of considera-

tion . . . .”). Since the U.C.C. applies only in commercial contexts, it has no need for a require-

ment meant to screen o social and domestic agreements. See id. § 2-102.

paid on both sides

763

requires the existence of a bargain, but does not police the adequacy of its terms,

is simply that its motivating rationale—in particular, the empirical generalization

at its heart—concerns the parties’ mere utilization of the bargain form and not

the adequacy of the terms of the agreement.

150

I do not claim originality for the rationale I have proposed. Although I do

not know of anyone who has explicitly oered it exactly as I have, I believe, as I

have said, that it is the best interpretation of Williston, and that it is also closely

related to explanations of the doctrine recently put forward by Douglas Baird

and Mindy Chen-Wishart.

151

What has not been noticed, however, is that, for

reasons we have already considered, this justiﬁcation is not available to propo-

nents of the reciprocal-inducement theory of consideration (a company that in-

cludes Baird).

152

As we have seen, the reciprocal-inducement theory of consid-

eration rules out the justiﬁcation for the rule by rendering the empirical claim at

its heart totally implausible. For if reciprocal inducement supplies the conten t of

the consideration requirement, then that requirement, as I have explained, does

not serve to screen o the personal domain, a domain marked by collaboration

150. To be sure, people sometimes enga ge in “mixed transactions” in intimate contexts, as when

sellers give their friends or family a gi in the form of an individualized discount. But even if

we were to set aside the judicial burdens of having to determine, in every case, whet her the

terms of a bargain reﬂect such a discount, the rationale I have assigned would not support

barring such mixed transactions unless the existence of a discount were a suciently reliable

sign that the transaction had occurred in a personal context. But the claim that such discounts

are a reliable sign of a friendship between buyer and seller is highly doubtful, as there are

ample legitimate reasons that discounts are given outside the contexts of friendship and fam-

ily.

151. See DOUGLAS G. BAIRD, RECONSTRUCTING CONTRACTS 29 (2013) (“A bargain must exist for a

promise to be legally enforceable. Inside the family, explicit bargains are the exception. Hence,

most intrafamilial promises are, in this world, not legally enforceable. Hamer is an exception

that proves the rule.”). Aside from the restriction to the family, attention should be drawn to

the qualiﬁcation in “explicit bargain.” Id. (emphasis added). Since the law enforces implicit

bargains, as well as explicit ones, the qualiﬁcation mars the analysis; in any case, I do not

believe it is needed. The reason that intimates are uncomfortable with explicit bargains is that

they are uncomfortable with bargains. As I have already noted, Chen-Wishart’s justiﬁcation

rests on the (dubious) empirical claim that gratuitous promises are generally conﬁned to the

personal domain. See Chen-Wishart, supra note 137, at 211.

152. Baird explicitly endorses the reciprocal-inducement theory of consideration. See BAIRD, supra

note 151, at 26-27 (“There just has to be an exchange. A legally enforceable promise could not

exist in the absence of a bargain. As Holmes put it, ‘. . . . The root of the whole matter is the

relation of reciprocal conventional inducement . . . .’ Legal enforceability turns on whether

there was consideration, and this, in turn, requires a bargained-for exchange.” (omission

added) (footnote omitted) (quoting O.W. HOLMES JR., THE COMMON LAW 293-94 (Boston,

Little, Brown, & Co. 1881)).

the yale law journal 129:690 2020

764

and coordination of the sort that commonly results in joint commitments to mu-

tually beneﬁcial plans of action that satisfy the conditions of reciprocal induce-

ment. Indeed, this incompatibility between the justiﬁcation and the modern the-

ory has led to a historical development of contract law that both corroborates the

functional explanation for consideration that I have put for ward and serves as

basis for a further substantial criticism of both the English system of contract

law and the approach of the Second Restatement. In both cases, the positions on

the doctrine of consideration and the legal-intent requirement have developed in

uncanny parallel. In particular, the acceptance of a motivational conception of

consideration results in the adoption of a legal-intent requirement that serves

the screening function that a distorted doctrine of consideration is no longer able

to serve.

I will begin with the English case, with which I shall be brief. Frederick Pol-

lock publishe d two editions of his inﬂuential contracts treatise prior to Lang-

dell’s publication of his deﬁnition of consideration. In each of these editions (of

1876 and 1878), Pollock adopted Savigny’s rule, derived from his Kantian Will

Theory, requiring legal intent as a condi tion of liability.

153

However, neither of

those editions contained any trace of Langdell’s deﬁnition of consideration. In

the third edition of his treatise (1881), published aer, and in light of, both Lang-

dell’s Summary and Holmes’s lectures, Pollock incorporated a version of Lang-

dell’s formula that, as we have seen, eectively entails Holmes’s motivational

construal.

154

In the very same edition, Pollock puts forward a new argument in

support of the rule requiring legal intent as a condition of liability: he claims that

only “Savigny’s view ” requiring legal intent can explain the legal invalidity of

social and domestic agreements.

155

This sequence is fully explicable in light of

the fact that the motivational conception of consideration entailed by Langdell’s

formula, in contrast with the remuneration conception, is unable to rule out all

the humdrum social and domestic agreements that satisfy the conditions of re-

ciprocal inducement. Accordingly, before Pollock adopted Langdell’s formula-

tion of the consideration rule, this argument in favor of Savigny’s rule was not

153. POLLOCK, supra note 31, at 1-2; FREDERICK POLLOCK, PRINCIPLES OF CONTRACT AT LAW AND IN

EQUITY 1-2 (London, Stevens & Sons 2d ed. 1878). In the ﬁrst two editions, general credit is

given to Savigny, see, e.g., POLLOCK, supra note 31, at 2 n.b, while the intent requirement is

referred to as “Savigny’s view” in the third edition, POLLOCK, supra note 11, at 2 n.a.

154. POLLOCK, supra note 11, at 179; see supra note 11 an d accompanying text (analyzing the deﬁni-

tion given in Pollock’s third edition). I am, once again, assuming that a weaker, and less plau-

sible, “I will if you will” the ory of exchange is not available. See supra note 50. None of my

arguments in this section depends on this view, however.

155. POLLOCK, supra note 11, at 2 n.a.

paid on both sides

765

available to him. The English courts, meanwhile, did not adopt (Pollock’s ver-

sion of) Langdell’s deﬁnition until 1915.

156

Up until then, the English courts,

apparently unmoved by Pollock’s embrace of Savigny, also declined to adopt the

rule requiring legal intent as a condition of enforcement. However, only four

years aer adopting Langdell’s deﬁnition, they went on to adopt the legal-intent

requirement. And they did so in Balfour v. Balfour, which involved a domestic

agreement lacking consideration according to the remuneration conception of

exchange, but satisfying the consideration requirement by the lights of the mod-

ern conception.

157

Let us now consider the (American) case of the Restatement. As we have

seen, the remuneration theory of consideration has little diculty ruling out in-

formal social and domestic agreements; when two friends commit to a dinner

engagement, neither their commitments nor their fulﬁllments stand in payment

relations to each other. Indeed, it is precisely on this basis that Williston argued,

against Pollock, that the doctrine of consideration was up to the task of excluding

these commitments, a view reﬂected in the silence of the First Restatement (over

which Williston presided as Chief Reporter) on the matter.

158

Corbin, however,

grasped the fact that Langdell’s deﬁnition (with its implicit motivational con-

ception of exchange) plainly gets the wrong result in these social and domestic

cases, necessitating a workaround. Accordingly, in his treatise, in what might be

seen as a rather unabashed display of his legal-realist orientation, Corbin seeks

to reach the right result by introducing a “rule” that says, simply, that the cases

156. Speciﬁcally, Pollock’s version of Langdell’s formula was adopted by Lord Dunedin in Dunlop

Pneumatic Tire Co. v. Selfridge & Co. [1915] UKHL 1, [1915] AC 847 (HL) 855 (Lord Dunedin)

(appeal taken from Eng.).

157. Lord Justice Atkin clearly implies that the agreement at issue in Balfour is supported by con-

sideration. In Balfour, the lower court had held in favor of the plainti, Mrs. Balfour, on the

ground that her husband’s promise was supported by consideration. Balfour v. Balfour (1919)

35 TLR 476 (KB) (Eng.). Lord Justices Warrington, Duke, and Atkin of the Court of Appeal

reversed unanimously. Aer observing that “it constantly happens” that agreements between

spouses satisfy the consideration requirement even when the spouses “did not intend that

they should be attended by legal consequences” and that such agreements “are not contracts

because the parties did not intend that they should be attended by legal consequences,” Lord

Justice Atkin goes on to say that “[t]he only question in this case is whether or not this promise

was of such a class [of promises made without legal intent] or not.” Balfour v. Balfour [1919]

2 KB 571 (CA) 578-79 (Atkin LJ) (Eng.) (emphasis added).

158. 1 WILLISTON, supra note 11, § 21, at 24 n.19 (“[T]he promise of the guest to attend the dinner

is not given or asked for as the price of the host’s promise.”); see also Gregory Klass, Intent to

Contract, 95 VA. L. REV. 1437, 1489 (2009) (describing Williston’s treatment of social and do-

mestic agreements in the First Restatement). Recall that Williston took seriously the payment

conception of exchange, while also, inconsistently, adopting the Langdellian deﬁnitionof con-

sideration. See supra note 45.

the yale law journal 129:690 2020

766

in this domain should be decided as they have always been decided. More exactly,

the rule he oers says that “[i]f the subject matter and terms are not such as

customarily have aected legal relations, the transaction is not legally operative

unless the expressions of the parties indicate an intention to make it so.”

159

This,

of course, is a retreat from principled explanation insofar as it does not articulate

the basis of the decisions that constitute the custom.

160

If the remuneration theory is correct, those past decisions (the ones that con-

stitute the custom) are to be explained by appeal to the doctrine of consideration.

Since Corbin was unable to appeal to consideration to explain these cases (given

his commitment to Langdell’s deﬁnition), he was forced to look elsewhere . Pol-

lock, as we have seen, explained the results in question by reversing the legal-

intent rule across the board (requiring legal intent in all cases), but Corbin, re-

ﬂecting American opinion, was unwilling to follow suit. Accordingly, the natural

place for him to look was to a direct (that is, nonproxy) rule that would replace

the background rule in what I have been calling personal and intimate contexts.

But Corbin, perhaps to his credit, did not attempt to deﬁne such contexts and so

settled on his appeal to past practice.

161

The draers of the Second Restatement added a comment to Section 21 on

“social engagements and domestic arrangements” that reﬂects Corbin’s position

but avoids the appeal to custom: “In some situations the normal understanding

is that no legal obligation arises, and some un usual manifestation of intention is

necessary to create a contract. Traditional examples are social engagements and

agreements within a family group.”

162

Gregory Klass has surmised that they may

have changed the formulation because of the explanatory shortcomings of

Corbin’s appeal to custom.

163

In light of the open-ended appeal to “normal [ju-

dicial] understanding,” however, there is little reason to credit the new formula-

tion as marking an improvement in this respect.

164

In any case, there is a better

explanation available for the change in formulation. Corbin’s rule, instructing

courts to carry on doing what they have been doing all along, presumably implies

159. 1 ARTHUR LINTON CORBIN, CORBIN ON CONTRACTS § 34, at 13 8 (2d ed. 1963) (emphasis

added).

160. In a discussion to which I am indebted, Gregory Klass says that Corbin’s rule is “arguably

circular.” Klass, supra note 158, at 1490. I do not think circularity is the best charge here, since

I do not think Corbin implied, or meant to imply, that this rule was what accounted for the

previous decisions. But it is a retreat from principle, insofar as Corbin does not articulate a

principle that can be used to distinguish the classes.

161. 1 CORBIN, supra note 159, § 34, at 141.

162. RESTATEMENT (SECOND) OF CONTRACTS § 21 cmt. c (AM. LAW INST. 1981).

163. Klass, supra note 160, at 1490.

164. RESTATEMENT (SECOND) OF CONTRACTS § 21 cmt. c.

paid on both sides

767

that well-established cases like Hamer v. Sidway,

165

which involved a genuine

quid pro quo exchange in a personal context, should not be overruled. Although

this is a result that accords wit h the remuneration theory and with the justiﬁca-

tion I have oered for it—on the grounds, at the very least, that the proxy rule

is, by deﬁnition, an approximation that does not perfectly capture the target class

of social and domestic agreements—it is not a position available to the Second

Restatement, for the simple reason that the Restatement lacks the resources to

cordon o the relevant class of cases. That is, it lacks the resources to distinguish

cases like Hamer, involving genuine exchanges, from those involving social an d

domestic agreements that are not genuine exchanges, but which nevertheless

satisfy the conditions of reciprocal inducement. Accordingly, the Reporters

opted for consistency and adopted a direct (i.e., nonproxy) rule which, I believe,

clearly implies that Hamer should be reversed. They did this by resorting to the

blanket description of “social engagements and agreements within a family

group,” a formulation that eectively leaves it to judges to determine not

whether there was legal intent in a given case, but whether the nature and quality

of the relation in a given case are suciently personal so as to fall under the de-

scription.

166

The remuneration theory elaborated here allows us to use the consideration

doctrine as an alternative to leaving this determination in the hands of judges.

But even setting aside the advantages of applying a suciently reliable proxy in

lieu of such a case-by-case judicial determination, we may marvel at what Corbin

and the draers have wrought. If my justiﬁcation of the consideration rule is

correct, even at the level of explanation, they have added a direct (nonproxy)

rule without eliminating the antecedent proxy rule of consideration, and have,

in turn, distorted that antecedent proxy rule beyond recognition. These mistakes

could be avoided by discarding a defective theory of bargain, as well as a deﬁni-

tion of consideration that eectively enta iled it.

167

165. 27 N.E. 256 (N.Y. 1891).

166. Although very little turns on it, I do not believe that the comment’s appeal to “normal under-

standing” can refer to the understanding of the general population. For there is certainly no

reason to think that laymen possess the “normal understanding” that the so-called “English

rule” (requiring a showing of legal intent across the board) does not obtain on these shores.

Indeed, in my experience, many people are surprised to learn that legal intent is not a condi-

tion of liability. Thus, the “normal understanding,” if it is to track the relevant distinction

between spheres, must refer to the understanding of judges.

167. See supra note 50. It follows from the arguments given in this Section that if a legal regime

(such as England’s) is wedded to a legal-intent requirement, then such a regime has no com-

pelling grounds for upholding a consideration requirement.

the yale law journal 129:690 2020

768

conclusion

In oering the foregoing account of consideration, I have attempted to strike

a path between two diametrically opposed modes of doctrinal ana lysis. On the

one hand, I have eschewed a prominent “realist” understanding of the doctrine.

On the other hand, I have avoided treating the doctrine as an embodiment of

noncontingent principles of right. According to the realist understanding, a ju-

dicial ﬁnding concerning consideration amounts to no more than the statement

of a conclusion—namely, that the agreement at issue is either enforceable or

not—reached not by the application of an independently speciﬁable bargain re-

quirement, but rather by the exercise of a broad discretionary power based on an

open- ended list of factors such as good faith, reliance, and substantive fair-

ness.

168

While there is little doubt that the term “consideration” has been

stretched beyond the province of bargain (on any conception of the form) to

embrace gratuitous promises that judges, rightly or wrongly, have wished to en-

force, the proper theoretical (and pedagogic) response to this is to make the ex-

ceptional character explicit and not to leap to a premature conclusion that the

exception has swallowed the rule.

169

Of course, exceptions can swallow rules, or

168. For an inﬂuential statement of this position, see ATIYAH, supra note 11. Atiyah was avowedly

inﬂuenced by Corbin, whose realism is evidenced throughout his inﬂuential writings on con-

sideration. For example, in an important discussion, Corbin urges his contemporaries to quit

trying to square the validity of bilateral contracts with the legal-detriment requirement, not

because it cannot be done, but rather because the basis of liability lies elsewhere and does not

need to clear any bar created by technical rules.

Mutual promises create a legal obligation because—in English-speaking coun-

tries, at least—the customary notions of honor and well-being cause men to per-

form as theyhave promised, and the lawmaking powers have decreed that in such

cases promise-breakers shall make compensation. Our prevailing credit system

in business requires such a rule. The basis for the enforcement of bilateral con-

tracts lies in mutual assent and fair dealing.

Corbin, supra note 45, at 375-76. Although, in this passage, he urges us to dispense with the

legal-detriment requirement, the reasoning applies more generally to any technical bargain

requirement. The familiar empirical and normative criticisms of the realist position—namely,

that courts rarely invent or ignore consideration in a manner inconsistent with the literal ap-

plication of the technical bargain requirement, and that the open-ended discretionary power

is at odds with the rule of law—are carefully rehearsed by Stephen Smith. See S

MITH, supra

note 24, at 227-32.

169. This has long been a standard way of analyzing judicial language concerning the validity of

the seal. Pollock, for example, explained that although

we are now accustomed to bring contracts under seal within the terms of the

condition by saying that where a contract is under seal the consideration is pre-

sumed. . . . [T]his is a transparent ﬁction. . . . The ancient reason why a deed

paid on both sides

769

indicate an absence of commitment to them, but whether they do is a function

not just of the amount of ﬂesh le on the bone aer the cuts have been made,

but whether the reasons for the exceptions are compatible with the underlying

reasons or principles for adopting the rule in the ﬁrst place. The deepest har-

mony between a rule and its exception is achieved when the very reasons for

adopting the rule also count in favor of recognizing the exception (as when the

reasons for the rule do not apply to a class of cases that are accordingly treated

exceptionally). When the exceptions are drawn on this basis, they do not

threaten the integrity of the rule even when the ground that they cover is quite

vast; for this reason, one cannot infer from a wil lin gne ss to draw exceptions that

a rule is not taken seriously. This is precisely the situation with regard to many

of the traditional exceptions to the bargain requirement: as we have seen, alt-

hough the exceptions are substantial, they align perfectly with the functional ra-

tionale I have ascribed. Of course, if one is (as Patrick Atiyah and Corbin were)

caught in the grip of a conception of the bargain requirement that obscures the

underlying rationale—indeed, a conception of the requirement that does not en-

joy the beneﬁt of any rationale—one may then understandably infer from the

breadth of the exceptions that they have been drawn without regard for the (so-

called) requirement. But this serves only to underscore the importance of ob-

taining a tighter grip on our central concepts in law—none more central or sig-

niﬁcant than bargain, or quid pro quo exchange.

In dierentiating my position from the realist one, I risk overstating the sig-

niﬁcance of the functional rationale for the overall account I have provided. Even

if one were to reject , or supplement, the rationale I have given, the account of

bargain or exchange would survive. So would the reconceptuali zation of consid-

eration that incorporates it an d, in so doing, avoids the traditional diculties

related to conditional gi promises and preexisting duties. Indeed, those who

are inclined to view the central doctrines of common law as embodiments of

noncontingent principles of right (Kantian or otherwise) might view my eorts

as a preliminary puriﬁcation: by purging the doctrine of its Holmesian dross,

and exposing its crystalline structure, perhaps consideration is now ripe for a

treatment revealing that it, too, is a corollary of an abstract principle of right.

This is not the course I have taken, and I embrace the contingency that is

woven into my analysis. According to my account, the bargain performs a func-

tion that, while open to challenge, is widely perceived as important: namely, en-

suring that the commitments made in personal, intimate contexts are not en-

forceable absent a manifest in tent to be legally bound. Even if we take this goal

for granted, the contingency of the rule derives from the fact that there are other

could be sued upon lay not in a consideration in our present sense of the word

being presumed from the solemnity of the transaction, but in the solemnity itself.

POLLOCK, supra note 31, at 116.

the yale law journal 129:690 2020

770

ways of achieving it. If the legal system has reasons for choosing this way of

achieving the goal rather than some other way (for example, rather than impos-

ing a direct, nonproxy rule requiring, as a condition of liability, a showing of

legal intent in social and domestic agreements) these are reasons that might

change over time, ungrounded in the inherent promissory rights of the parties

to the agreement. Recognizing this contingency strikes me as an appropriate po-

sition to adopt, and not on ly for the familiar reason that other legal systems with

their own distinct ways of achieving similar functions do not seem to be suscep-

tible to a rights-based criticism on those grounds alone.

170

More fun damentally,

the line separating (unexecuted) exchange agreements from gratuitous promises

does not seem to possess the kind of intrinsic signiﬁcance that could directly jus-

tify their dierential treatment within contract law. Perhaps I am wrong and fail

to grasp the full potential of the account I have oered. Perhaps the reciprocal-

payment relation that I have identiﬁed possesses just the kind of signiﬁcance that

could justify the requirement without appeal to other factors. I am open to that

possibility but have not yet seen how the case can be made. In any event, the line

between exchange and gratuitous agreements does have considerable social sig-

niﬁcance; indeed, it bears a very close relation—whether indicative or constitu-

tive—to social distinctions that, it is wi dely beli eved, the law of contracts has

reason to heed. And so I conclude that it is these social lines that are the objects

of the law’s concerns when it imposes a bargain requirement. The resulting ac-

count is, to be sure, a functional one, assigning the doc trine the independently

speciﬁable goal of screening o informal social and domestic agreements. But

we must not think that such an explanation in any way denigrates the doc-

trine.

171

I would say that to harbor such a thought is to commit the error of treat-

ing the common law as though it were divine law; however, even divine law fre-

quently receives a functional justiﬁcation from even its most devoted

adherents.

172

In closing, I would like to gesture, however inadequately, toward a ﬁnal re-

spect in which the doctrine serves its function only contingently. A bargain re-

quirement is a sensible way of marking o the distinction between the personal

170. For comparative approaches that emphasize the functional commonalities between thediverse

systems, see THE ENFORCEABILITY OF PROMISES IN EUROPEAN CONTRACT LAW (James Gordley

ed., 2001); and Arthur T. von Mehren, Civil-Law Analogues to Consideration: An Exercise in

Comparative Analysis, 72 HARV. L. REV. 1009 (1959).

171. This is especially true when we consider that the goal is not restricted to the satisfaction of

preferences but rather relates to the noninstrumental value of personal relationships.

172. For example, the Babylonian Talmud records the view that the prohibition concerning the

consumption of wine produced by non-Jews is to be explained by the rabbinic policy of dis-

couraging intermarriage. See KOREN TALMUD BALVI, NOÉ EDITION: AVODA ZARA & HORAYOT

191 (Tzvi Hersh Weinreb & Joshua Schreier eds., Koren Publishers Jerusalem 2018) (c. 3d-6th

centuries C.E.).

paid on both sides

771

and nonperso nal domains only insofar as the exchange form is widely used in

the nonpersonal domain. It is on e thing to derive exceptions to a bargain re-

quirement for discrete kinds of nonexchange transactions in the commercial

realm (such as surety agreements); it would be quite another to apply a bargain

requirement to screen for social contexts if bargains had fallen out of use entirely.

Of course, quid pro quo exchange is at no risk of extinction, and this is not to be

lamented. However, once the nature of exchange has been exposed—and Recip-

rocal Debt Satisfaction and No Residue articulated—we can appreciate that the

appeal of the form depends on bot h the desirability and availability of the species

of closure that it promises. And it is important to see that background norms

and collective decisions can make an impact on each of these things. This is eas-

iest to observe by considering the extreme cases. Where individuals (or groups)

take themselves to be without normative constraints in their interactions with

strangers, the prospect of leaving unsettled the status quo ante with particular

strangers might be a frightening one, and people living in such conditions might

generally welcome modes of service that establish lasting ties. At the other ex-

treme, where a strict egalitarianism of resources prevails, and everyone must end

up with an even share at the end of the day, many exchanges are rendered futile,

subject to unwinding at day’s end.

173

Just as Rawls, following Hume, identiﬁed

“circumstances of justice” in which human cooperation is both possible and de-

sirable (indeed, necessary)—namely, limited altruism, moderate scarcity of re-

sources, and a rough equality in mental and physical capacities

174

—so too are

there circumstances of exchange, yet to be identiﬁed.

Beyond its role in hastening or preventing the extreme cases, the law may

otherwise impact the desirability of exchange by limiting the degree of closure

that may be produced by the transactional form. The infamous 1842 decision of

Winterbottom v. Wright,

175

as well as the subsequent development of the law of

negligence, is a case in point, and a ﬁtting close to this Article. In Winterbottom,

the injured driver of a defective coach (owned by the driver’s employer, the Eng-

lish postmaster) sued the coach’s manufacturer, and the Exchequer of Pleas dis-

missed the suit for lack of “privity” between the driver and the manufacturer.

What is interesting, for our purposes, is th e analysis of Lord Chief Baron

Abinger:

173. This is related to Robert Nozick’s well-known Wilt Chamberlain example. See ROBERT

NOZICK, ANARCHY, STATE, AND UTOPIA 160-61 (1974).

174. See HUME, supra note 63, at 317-18; JOHN RAWLS, ATHEORY OF JUSTICE 109-10(rev. ed. 1999).

175. Winterbottom v. Wright (1842) 152 Eng. Rep. 402; 10 M&W 109.

the yale law journal 129:690 2020

772

By permitting this action, we should be working this injustice, that aer

the defendant had done everything to the satisfaction of [the postmas-

ter], and aer all matters between them had been adjusted, and all accounts

settled on the footing of their contract, we should subject them to be ripped

open by this action of tort being brought against him.

176

Chief Baron Abinger grasped that parties to exchange agreements regard

each performance as discharging the duties generated by the other, and con-

cluded (questio nably) that a ﬁnding of liability would be at odds with this

understanding.

177

However, Chief Baron Abinger drew the wrong conclu-

sion about the legal signiﬁcance of the parties’ understandings, and seventy-

ﬁve years later a tort duty grounded in foreseeability of harm was ﬁrmly es-

tablished by Judge Cardozo in his opinion for the New York Court of Ap-

peals in MacPherson v. Buick Motor Co.

178

Judge Cardozo explained the

court’s rejection of the privity rule as follows:

We have put aside the notion that the duty to safeguard life and

limb, when the consequences of negligence may be foreseen, grows

out of contract and nothing else. We have put the source of the ob-

ligation where it ought to be. We have put its source in the law.

179

While Judge Cardozo’s decision is justly celebrated (and Chief Baron

Abinger’s rightly maligned), we must also give Chief Baron Abinger his due

by recognizing that locating such a duty of care “in the law” does, to some

extent (however justiﬁably), interfere with the abi lity of exchange to facili-

tate the redistribution of goods and services in such a way that leaves the

parties’ rights and duties in all other respects undisturbed. Corresponding

with the law’s recognition of the responsibilities owed to wards the strangers

with whom we interact is a diminishment in the appeal of a particular trans-

actional form—the exchange agreement—that allows us to remain at arm’s

length in those interactions.

176. Id. at 405, 10 M&W at 115 (Abinger CB) (emphasis added).

177. I say this conclusion is questionable, given that the plainti was a third-party stranger to the

exchange. On my account, each party to an exchange regards their performance as discharging

all duties owed to the other party on account of the other party’s performance, and this under-

standing is not strictly incompatible with a duty owed to a third party on account of one’s

own performance.

178. 111 N.E. 1050 (N.Y. 1916).

179. Id. at 1053.