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Contracts • Contract Formation
K#040
Legal Definition
Consideration requires a bargained-for exchange of legal value.
Plain English Explanation
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.
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.
Hypothetical
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Related Concepts
Are offers assignable?
Are pre-existing duties valid consideration?
Can partial payment of a debt be consideration for release of that debt?
How can an offeree reject an offer?
How do courts assess the adequacy of consideration?
How may an offer be revoked?
Though offers can generally be freely revoked, what are the 4 exceptions?
Under battle of the forms, what happens to additional or different terms in an acceptance when at least one of the parties is a non-merchant?
Under battle of the forms, what happens to additional terms in an acceptance between two merchants?
Under battle of the forms, what happens to different terms in an acceptance between two merchants?
What are consideration substitutes?
What are illusory promises and how do they affect a contract?
What are requirement and output contracts?
What are the methods of terminating an offer?
What are the requirements of an offer?
What are the UCC Gap Fillers?
What is acceptance?
What is a contract?
What is a merchant's firm offer?
What is an option contract?
What is detrimental reliance?
What is promissory estoppel?
What is required to form a valid, binding contract?
What is the effect of a conditional acceptance on an offer?
What is the effect of a contract that contains vague or ambiguous terms?
What is the effect of a contract that is missing price terms?
What is the effect of a contract that is missing quantity terms?
What is the effect of a counteroffer on an offer?
What is the effect of a lapse of time on an offer?
What is the effect of an offeree beginning to perform in response to an offer?
What is the effect of a seller sending non-conforming goods?
What is the effect of including additional or different terms to an offer?
What is the effect of part performance of a unilateral contract?
What is the effect of the death of a party prior to acceptance of an offer?
What is the Mailbox Rule and when does it apply?
When are advertisements valid offers?
When are price quotes valid offers?
When is past or moral consideration valid?
Who controls the method of acceptance, and what are the typical ways that an offer is accepted?
