Consideration

What Is Consideration? Consideration is one of the essential elements required to form a valid contract under common law. It refers to the value that each party gives or promises in exchange for the other party's performance or promise. Without consideration, an agreement is generally treated as a gift or a gratuitous promise and is not enforceable in court. ## Forms of Consideration Consideration can take many forms, including: - Money or payment for goods and services - A promise to perform a specific action - A promise to refrain from doing something (forbearance) - Transfer of property or rights - Mutual promises between parties ## Legal Requirements Courts generally do not evaluate the adequacy of consideration, meaning they will not assess whether the exchange was fair. However, consideration must be legally sufficient, meaning it must have some recognizable value. Past consideration, or something already done before the contract was formed, typically does not count. Illusory promises, where one party retains complete discretion over whether to perform, also fail as valid consideration.