united-states contract-law
Does consideration have to have value for someone who is a party to the contract?
<p>Suppose person A tells person B, "If you perform (service X) for me, I will donate $1,000 to Save the Whales (but no other compensation)." Neither A nor B has any connection to whales and will not benefit from this donation, but B happens to like whales and agrees anyway. Does this still count as consideration, even though there was never any possibility of B getting anything out of it? (United States)</p>

<blockquote>
  <p>Does this still count as consideration, even though there was never any possibility of B getting anything out of it?</p>
</blockquote>

<p>Yes. The sole fact that the promisee and the beneficiary are different and unrelated entities does not invalidate a contract.</p>

<p>In terms of the <a href="https://www.nylitigationfirm.com/files/restat.pdf" rel="nofollow noreferrer">Restatement (Second) of Contracts</a> at § 302(1)(b), what matters is that "<em>the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance</em>".</p>

<h2>Yes</h2>

<p>Consideration must pass from the <a href="http://e-lawresources.co.uk/Tweddle-v-Atkinson.php" rel="nofollow noreferrer">promisee</a>, it doesn’t have to pass to the promisor.</p>

<p>However, at common law, if A doesn’t perform, B can sue but Save the Wales can’t. This is part of the doctrine of <a href="https://en.m.wikipedia.org/wiki/Privity_of_contract" rel="nofollow noreferrer">privity</a>. The landmark cases are <a href="https://en.wikipedia.org/wiki/Beswick_v_Beswick" rel="nofollow noreferrer">Beswick v Beswick [1967] UKHL 2, [1968] AC 58</a> in the UK and Coulls v. Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460 in Australia. In both cases, a third party beneficiary was unable to obtain performance on their own behalf, however, also in both cases, they were both executors of the estate of a party to the contract and could sue in that capacity.</p>

<p>This is still good law in Australia (except Queensland, Northern Territory and Western Australia) but the <a href="https://en.wikipedia.org/wiki/Contracts_(Rights_of_Third_Parties)_Act_1999" rel="nofollow noreferrer">Contracts (Rights of Third Parties) Act 1999</a> has rendered it obsolete in the UK. The problem can be overcome by making the third party a party to the contract for a peppercorn consideration, say $1.</p>
