JD Next Practice Exam

In the promise of a $200 monthly pension for retirement, what indicates the presence of consideration?

1. There is a straightforward exchange for a service

2. The promise is verbal and informal

3. The promise depends on future performance

4. There are no conditions attached to the payment

The correct answer is: There is a straightforward exchange for a service

The presence of consideration in a contract signifies that there is something of value being exchanged. In this scenario, if the $200 monthly pension for retirement is based on a straightforward exchange for a service, it demonstrates that both parties involved in the agreement are providing something of value. The individual agreeing to receive the pension likely commits to a form of service, such as working a specified period or fulfilling certain conditions leading up to retirement. This mutual exchange is often a core requirement for establishing a legally binding contract, emphasizing that both parties have a stake in the agreement. Considering the context of the other options, stating that the promise is verbal and informal does not necessarily imply consideration, as agreements can be formal or informal while still lacking value exchange. Similarly, if the promise depends on future performance, it introduces ambiguity regarding consideration since the value might be uncertain until the performance is executed. Lastly, if there are no conditions attached to the payment, it could raise questions about the legitimacy of the agreement and whether a true exchange of value has occurred, rather than indicating the presence of consideration. Thus, the clear exchange of a service confirms the presence of consideration in the promise of a pension.