Legal Question in Business Law in California

Consider the following transaction. Parties A and B agree that first, party A will perform some service for B, then A will pay B any amount he thinks is appropriate, including possibly nothing at all. Typically, A and B would probably transact in this manner many times in succession. Or A's reward to B would be public information. In either case, A is incentivized not to be too stingy, otherwise no one will transact with him again in this manner.
I have seen a variation of this type of transaction used to sell small items on the internet, e.g., access to an article or a computer game. There, it was called "Pay What You Want". But in that case, one pays before receiving the good/service.
How would the law treat such a series of transactions? Is there any contract at all? Would this be considered a lottery under state gambling laws?
Example:
For example, A might say, "B, please tell me the best idea you know to help me find a wife. I'll pay you what I think your idea is worth." B says, "I thought you were already married." A says, "Well, yes, but I'm not giving you a penny for that lousy answer."

Asked on 1/03/14, 2:21 am

2 Answers from Attorneys

Frank Natoli Natoli-Legal, LLC

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This is kind of silly and fraught with problems from a legal standpoint assuming someone was motivated to try and enforce the agreement (for lack of a better word).

You have no contract because there is no consideration. While a promise for a promise can suffice it ceases to be an enforceable contract when the other party has the option of not paying anything. Further, and under the right circumstance a court may find it unconscionable to allow someone to be unjustly enriched and therefore award that person a remedy.

Answered on 1/03/14, 7:49 am

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