Consideration

Definition

Consideration is a benefit (or money) coming from a promisee to a promisor in exchange for the promisor's agreement to perform an act.

Purpose

The purpose of consideration is to provide value in a contractual agreement, ensuring that each party receives something of value in exchange for their promise or performance. It is a fundamental element in contract law.

Examples of Use

• In a sales contract, the buyer's payment is the consideration for the seller's delivery of goods.
• In a service agreement, the client's payment serves as consideration for the contractor's performance of services.
• In a lease, the tenant's rent payments are consideration for the landlord's provision of property.

Related Terms

• Contract: A legally binding agreement between two or more parties.
• Offer and Acceptance: The process by which a contract is formed, involving an offer by one party and acceptance by another.
• Mutual Assent: The agreement of both parties to the terms of a contract.

Notes

Consideration must be something of value, but it does not have to be monetary. It can include services, goods, or a promise to refrain from a specific action. Both parties must provide consideration for a contract to be valid.