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What is the Difference between a Gift and a Bargain?

Professor Todd Zywicki discusses why the distinction between a gift and a bargain is a fundamental concept for contract law. A bargain involves an exchange of promises on the part of all the parties involved. This results in a contract which can be upheld in a court. A gift is something that involves a promise on the part of the giver but there can be no reciprocal promise required of the recipient so it’s not pursuable in a court of law. https://youtube.com/watch?v=r_RVr4_wRIE


The difference between a gift and a bargain is one of the essential concepts of contract law. And the way you could think about this is a bargain is a situation in which a party will promise to do something in exchange for another promise. And both of those promises will be made only if it is legally enforceable. A gift by contrast is a situation in which I promise to do something for you, but I am not trying to induce you to do anything for me and this notion of inducement is what makes something, a contract versus a gift. Why is that so important? The basic logic is a contract is about trying to enable people to plan their affairs into the future. If I offer you a gift. It's probably because we have some relationship, and I'm very likely to follow through on that gift. If however you could sue me for not doing so, I would be unlikely to make those promises. I might just wait till the last second and then give you some money rather than promising to give you money somewhere down the road, or do something for you down the road and therefore you would not be able to plan your affairs as well. It's the opposite for contract, which is I'm only going to perform for you, if I know that you are going to perform for me, and if we don't have any kind of preexisting relationship, like there would be in a gift context, we're not gonna make those promises unless we have the ability to go to court and enforce them. And so the difference between a gift and a contract is this notion of inducement. And the idea of inducement is really designed to further this overarching goal of the common law and contract law of allowing parties to better, coordinate, their affairs and to plan their lives into the future.

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