What does Consideration mean?
All valid contracts have specific requirements. For example, all contracts must have consideration, which means each party in the contract must exchange something of value for a product, service, or promise. Consideration can also include rights, interests, profits, benefits, detriment or forbearance.
Consideration is an essentail element of a contract
Consideration is considered one of the most essential elements of a valid contract. Consideration allows for the act of bargaining or coming to an agreement of terms. Consideration does not require that goods and services are exchanged for exactly fair market value, but the courts have generally deemed that a contract’s consideration must be adequate, which means appropriate consideration must be made and the contract must allow for a mutual exchange of promises, goods, or services with some intrinsic value.
Although inadequate consideration may not automatically invalidate the contract, if there is inadequate consideration the question of enforceability may arise in court. Cases of inadequate consideration, however, most often arise when one party argues the contract is not valid due to the fraudulent actions of the other party.