§ 1.10 ''Bargain'' as a Contractual Expression

The word ''bargain'' is often used as substantially synonymous with agreement and contract. In this work, however, it is used with the connotation of a definite exchange of equivalents, of a quid pro quo. Restatement of Contracts (Second) § 3 provides: ''A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.'' As so used, a bargain is one kind of agreement. There are many agreements that are not bargains; and there are many contracts that involve no bargain.n1 But a bargain is always an agreement for an exchange.n2

The exchange agreed upon may be a promise for a promise-the ordinary bilateral contract. It may be a promise by one party in exchange for some executed performance by the other-the ordinary unilateral contract. It may also be an exchange of two commodities-a barter. There may also be a bargain for an exchange in a double sense, for an exchange of promises and for an exchange of the promised performances. In the case of aleatory bilateral agreements, this double exchange does not exist; the two promised performances are not regarded or agreed by the parties to be equivalents.n3 In no case are the premiums to be paid for a policy of insurance or for a surety bond regarded as the agreed equivalent of the amount promised conditionally by the insurer or the surety.

There are many agreements that are not bargains just as there are many contracts that are not bargains. Two parties may express mutual agreement in the case of a sealed promise to make a gift. There is agreement, and there may be contract, in such a case; but there is no bargain. Also, a promise may become binding by reason of action by the promisee in reliance upon it, even though such action was not bargained for and neither party has agreed upon it as the equivalent of the promise.

Just as there are agreements that are not contracts, so also there are bargains that create no contract. One may bargain for and actually receive many an agreed equivalent that is insufficient consideration for a promise. Such a bargain makes no contract.

Legal Topics:

For related research and practice materials, see the following legal topics:

Contracts LawContract InterpretationGeneral OverviewContracts LawTypes of ContractsGeneral OverviewContracts LawConsiderationEnforcement of PromisesGeneral OverviewContracts LawConsiderationMutual ObligationContracts LawTypes of ContractsBilateral Contracts

FOOTNOTES:

(n1)Footnote 1. For illustrations of contracts that involve no exchange of equivalents and no ''bargain'' see Chapter 10, Contracts Under Seal, and Chapters 8, 9, Informal Contracts Without Assent or Consideration.

That there may be a bargain by an exchange of promises, without any intention that the promised performances are also to be exchanged, see Aleatory Contracts, Chapter 38 herein. Most bilateral contracts involve a bargain for an exchange of the promised performances as well as for an exchange of promises. Most unilateral contracts involve a bargain for the exchange of a promise for a performance that is not promised.

(n2)Footnote 2. This differs from its predecessor, Restatement of Contracts § 4 which omitted from the definition agreements to exchange performances, thereby excluding sales and barters.

(n3)Footnote 3. See Chapter 38, Aleatory Contracts.