What Is a Consideration in Law

For consideration to be considered valid, two elements must be present: the consideration is one of the six elements that make up a legally binding contract. It is something of value that is given in exchange for something else of value. A common example of consideration is money given in exchange for goods or services. In other words, the consideration is what you get out of a contract. To be valid, the counterparty must have the following: There are conditions that the counterparty must meet in order to have sufficient legal value. A party cannot promise to do something if there is already a legal obligation to do so. A police officer cannot receive a reward for the capture and arrest of an outlaw. The promisor must perform an action to which he is not normally obliged. A police officer cannot hire independent security services for his neighbourhood while on duty in his regular job. He already has an obligation to secure the neighborhood. Long trials and writings about what constitutes a consideration abound. In short, there are two other important things to know.

First, the counterpart does not have to be money. It can be something of value, so it can be another object or service. However, some courts in the United States may challenge nominal consideration or virtually worthless consideration. Some courts have since found this to be a deception. Since contractual disputes are usually settled by state courts, some state courts have held that simply providing $1 to another is not a sufficient legal obligation and therefore there is no legal consideration in this type of transaction and, therefore, no contract is concluded. However, this is a minority position. [31] The reason why both exist in common law jurisdictions is considered by leading scholars to be the result of the combination of two different threads by 19th century judges. First, the requirement of consideration was at the heart of the Assumpsit action, which arose in the Middle Ages and remained the normal action for breach of a simple treaty in England and Wales until 1884, when the old forms of action were abolished; second, the concept of agreement between two or more parties as the essential legal and moral basis of the contract was promoted in all legal systems by the 18th century French writer Pothier in his Traité des Obligations, which (especially after its translation into English in 1805) was widely read by English judges and jurists. The latter corresponded well to the fashionable theories of the will of the time, particularly John Stuart Mill`s influential ideas on free will, and grafted onto the traditional requirement of customary law to justify an action for acceptance. [26] No.

1) Payment or money. (2) As an essential element of contract law, consideration is an advantage that must be negotiated between the parties and is the essential reason for the conclusion of a contract by a party. The consideration must have value (at least for the parties) and is exchanged for performance or promise of performance by the other party (this performance itself is consideration). In a contract, a consideration (given thing) is exchanged for another consideration. Not doing an action (abstaining) can be a consideration, for example: “I`m going to pay you $1,000 not to build a road next to my fence.” Sometimes the consideration is “nominal,” meaning it is only indicated for the form, such as “$10 in exchange for transfer of ownership,” which is used to hide the actual amount paid. Contracts may become unenforceable or cancelled (cancelled) for “non-compliance” if it is determined that the intended consideration is worth less than expected, damaged or destroyed, or that the service is not properly performed (e.g., if the mechanic does not operate the car properly). Acts that are so unlawful or immoral as to be contrary to established public policy may not be used as a counterpart to enforceable contracts. Examples: prostitution, gambling, where prohibited, hiring someone to break a skater`s knee or getting someone to break an agreement (getting someone to withdraw from a promise). If A signs a contract with B so that A cancels B`s house for $500, A`s consideration is the painting service of B`s house, and B`s consideration is $500 paid to A. If A signs a contract with B not to repaint his own house in a color other than white, and B pays A $500 a year to maintain that agreement, there is also a consideration. Although A promised nothing to do, A promised to do nothing he was allowed to do, and so A`s consideration for B is the indulgence of painting his own house in a color other than white, and B`s consideration for A is $500 a year.

Conversely, if A signs a contract to buy a car from B for $0, B`s consideration is still the car, but A gives no consideration, and therefore there is no valid contract. However, if B still transfers ownership of the car to A, B cannot take back the car because, although it is not a valid contract, it is a valid gift. No matter what type of contract you make, you`ll probably hear the term “consideration.” In addition to offer and acceptance, “consideration” is one of the essential elements of a contract. But what does that really mean? That is, the value that the promisor attaches to the consideration must correspond to the value that the promisor attaches to the performance of the terms of the contract. In other words, both sides want to know, “What`s in it for me?” Although we have tried here to present the basics of consideration in contracts, it can be very complex. Consideration can be thought of as the notion of value offered and accepted by persons or entities entering into contracts. Anything that one party promises to the other when entering into a contract can be treated as “consideration”: for example, if A signs a contract to purchase B`s car for $5,000, A`s consideration is $5,000 and B`s consideration is the car. On the other hand, if you tell your neighbour that you will give her the bike if you cannot sell it at your flea market, there is no element of consideration because she has not agreed to pay you anything. Your promise to give him the bike may be an enforceable promise, but it is not a binding contract. The counterpart is generally not an element of a gift. Consideration is something of value that is exchanged between the parties to a contract.

It can be money, work, property or many other things. Both parties must receive consideration for a contract to be valid. For example, if John (Promisor) offers Jamal (Promised) $200.00 to repair his car and accepts Jamal, the consideration of $200.00 (value) for the repair (performance). In general, a conditional consideration is a valid consideration. Consideration is something of value that is exchanged between the parties to a contract. Consideration can be many things such as money, property, service, job performance, or a promise not to do something. As long as the contracting parties exchange something valuable with each other, there is something in return. The value of the exchange must be legally sufficient. This means, among other things, that the consideration of each party must be of equal value.

In our example, the $295 fee and the work done to repair the toilet were about the same, so the consideration is legally sufficient and the contract is valid. The consideration must also be negotiated. This means that both parties must agree to give up something as part of the contract. In our example, Mr. Smith waived $295 and Ms. Jones donated her time and plumbing expertise. Consideration, as we have learned, is simply something of value that is exchanged between the parties to a contract. To be considered, it must be: Let`s look at an example. Lord. Smith has a problem with the toilet in his house. He hires a plumber, Mrs.

Jones, to fix the toilet. Ms. Jones tells Mr. Smith that it will cost him $295 to do the work. He accepts and pays her the money. Then she repairs the toilet. In this example, the $295 was a quid pro quo for Mrs. Jones, and the repair of the toilet was a quid pro quo for Mr.