consideration legal definition

Something of value to either the promisee or the promisor of a contract (usually cash, but also property, a promise to do something or not to do something, and so on) that is given or will be given by the promisee to the promisor in exchange for a performance or a promise of a performance by the promisor. For the contract to be enforceable, the consideration must be something that the promisee, to his or her detriment or loss, is giving up, or something that benefits the promisor.

Consider-ation that is neither a detriment or loss to a promisee nor a benefit to the promisor. For example, the promise to pay for an item with something that is worthless to both the promisee and the promisor is gratuitous consideration. A contract based on such consideration is unenforceable.

Consideration that contravenes the law, public policy, or the public interest. For example, the promise to physically harm someone in exchange for an item is illegal consideration. A contract based on such consideration is unenforceable.

Consideration that is so small that it has no meaningful value in light of the performance or promise that it is being exchanged for. For example, when buying a $10 million business for only one dollar, the dollar is nominal consideration. Traditionally, courts did not consider the value of the consideration when determining the enforceability of a contract, but today a nominal consideration might be viewed as evidence that the contract is unconscionable or is, in reality, a gift rather than a contract.

Consideration consisting of an act performed or promise given in the past. For example, the promise to pay a debt that one is already obligated to pay is past consideration. A contract based on such consideration is usually unenforceable because, typically, the original performance was done or the original promise was made for some reason other than to exchange it for the current performance or promise of the promisor.

Consider-ation that is of a great enough value to be meaningful in light of the performance or promise that it is being exchanged for.

Consideration that is of a great enough value to be meaningful in light of the performance or promise that it is being exchanged for and that has a measurable financial value to either the promisee or the promisor.