Consideration




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Consideration is a requirement for the enforceability of most contracts. Contract consideration means that each party is agreeing to suffer a “legal detriment” in exchange for the legal detriment agreed to by the other party.  Because consideration is tantamount to a requirement for a “bargained for” exchange, an event that already occurred cannot constitute consideration for new agreement.

While consideration need not necessarily be “fair” for contract to be enforceable; the consideration must be sufficient so that it is not considered a “sham.”

Consideration is not the same as providing a benefit to the other party, as an agreement to desist from exercising a legal right can also constitute consideration, even if it gives nobody else direct benefit.

Consideration is typically discussed in the context of the requirement of “mutuality of consideration,” which requires that both sides agree to something that constitutes consideration for a bilateral contract to be enforceable.