Contracts Consideration Definition

In order for a contract to be legally binding, it must contain certain elements. One of these elements is consideration. Consideration is what each party to the contract agrees to give up in order to receive something else of value. For example, if you agree to sell your car for $1,000, the consideration would be the $1,000 that the buyer gives you in exchange for the car.

Without consideration, a contract is not legally binding. This means that either party can back out of the agreement without consequences. Consideration must be given by both parties in order for the contract to be binding. If only one party gives consideration, the contract is voidable at the option of the party who did not give consideration.

Consideration can take many forms, including money, property, services, or a promise to do or refrain from doing something. In order for consideration to be valid, it must have some value and it must be exchanged for something else of value. Something of value does not have to be money; it can also be a promise to do something (or refrain from doing something) that has value. For example, if you agree to mow your neighbor’s lawn every week for six months in exchange for them painting your house, both parties have given up something of value (their time and labor) in order to receive something else of value (the painting of their house).

In some cases, courts will find that there was no real consideration