What is consideration?

Consideration is the heart and soul of a binding contract. It's the glue that causes a contract to be binding. Unfortunately, it isn't always clear as to what qualifies as consideration. The most obvious example of consideration is money, but the reality is that anything of value can be a form of consideration. For example, if your annoying sister says, "I promise I'll never interrupt you while you are playing video games," there is nothing in that statement alone to force her to keep her promise. However, if your annoying sister says, "I promise I'll never interrupt you while you are playing video games if you promise to drive me to the movies tonight." Suddenly you have an offer with consideration. Here, the consideration she is offering is the value of her not interrupting you playing video games, and the consideration she is asking for is you promising to drive her to the movies that night. This exchange of promises has no money involved, and yet they are bargained-for exchanges of value.

It's also worth noting that one of the primary elements that separates an enforceable promise to give someone something and a simple offer to give a gift is the presence of consideration. In other words, if you tell someone, "I promise to give you my car." That is just an unenforceable offer to give a gift. But if you add consideration and say, "I promise to give you my car if you pay me $100," now it is a valid offer that may be accepted by the offeree.