Consideration In Business Law Definition
In business law, the term “consideration” refers to something of value that is given in exchange for goods or services. Consideration must be present in order for a contract to be binding. For example, if one party agrees to sell goods to another party, the consideration would be the payment that the second party agrees to make.
Consideration can take many forms, including money, property, services, or a promise to do or not do something. In order for consideration to be valid, it must be something that has value and is bargained for by both parties. For example, a promise to mow someone’s lawn in exchange for payment would be considered valid consideration. However, a promise to do something that the person is already obligated to do (such as keeping a promise) would not be considered valid consideration.
Consideration must also be “adequate.” This means that it must be proportional to what is being exchanged. For example, if one party promises to sell a car for $1,000 and the other party agrees to pay this amount, the consideration is adequate. However, if one party promises to sell a car for $1 and the other party only agrees to pay $0.50, the consideration is not adequate because it is not proportional to what is being exchanged.
Consideration must also be “mutual.” This means that both parties must offer something of value in order for a
