Contract as Transfer of Ownership, Even Without Consideration

Abstract

AbstractFunctionalist justifications for the consideration requirement, and the many criticisms of them, are well developed in the literature. But Peter Benson offers a different sort of justification. He argues that contracts are transfers of ownership, and he builds his transfer theory around the consideration requirement. He claims that a bilateral and mutual act is required for ownership to be transferred. Therefore, he argues that consideration is a central part of what a contract inherently is because it works to ensure that there is a bilateral and mutual relationship between the parties. In this article, I challenge this view. I accept for the sake of argument that contracts are transfers of ownership and that they must be bilateral and mutual acts. However, I argue that a sufficiently bilateral relationship can be established, even without consideration, through the acts of offer and acceptance. In doing so, I demonstrate that it is not necessary to view the doctrines of offer, acceptance, and consideration as being inextricably linked as Benson does. Moreover, drawing on insights from the civil law tradition, I show that a relationship of mutuality can be established in contracts that are not backed by consideration. Since I demonstrate that contracts can be seen as transfers of ownership even without consideration, I argue that the bulk of Benson’s transfer theory could remain intact if the consideration requirement were to be removed. Finally, I argue that, in light of recent developments in many common law jurisdictions, Benson’s transfer theory must be understood without the consideration requirement in order for it to withstand the test of time.