Legal Definitions - good consideration

In contract law, consideration is a fundamental element required for an agreement to be legally binding and enforceable. It refers to the bargained-for exchange between parties, meaning each party gives up something of legal value or incurs a legal detriment in exchange for the other party's promise or performance.

Good consideration refers to this type of legally sufficient consideration. It doesn't imply moral goodness, but rather that the exchange is recognized by law as having value and being part of a mutual bargain. For consideration to be "good," it must involve a benefit to one party or a detriment (giving up a legal right or undertaking an obligation) to the other, and it must be the reason the parties entered into the agreement.

Here are some examples illustrating good consideration:

• Example 1: A Service Agreement

  Imagine a small business owner, Sarah, hires a freelance web designer, Tom, to create a new website for her company. Sarah promises to pay Tom $3,000 upon completion of the website, and Tom promises to design and build the website according to their agreed specifications.

  How it illustrates good consideration: In this scenario, Sarah's promise to pay $3,000 is good consideration because it represents a legal benefit to Tom (receiving money) and a legal detriment to Sarah (parting with money). Tom's promise to design and build the website is also good consideration, as it represents a legal benefit to Sarah (getting a website) and a legal detriment to Tom (expending his time, skill, and resources). Both parties have exchanged something of legal value, making their agreement a legally enforceable contract.

• Example 2: A Forbearance Agreement

  Consider a situation where a landlord, Mr. Henderson, agrees not to evict his tenant, Ms. Davies, for two months, even though she is behind on rent. In exchange, Ms. Davies promises to pay an additional $100 per month for the next six months to cover the arrears and a small administrative fee.

  How it illustrates good consideration: Mr. Henderson's promise to refrain from exercising his legal right to evict Ms. Davies is good consideration. He is giving up a legal right (a detriment) in exchange for her promise. Ms. Davies's promise to pay the additional $100 per month is also good consideration, as it represents a legal benefit to Mr. Henderson (receiving more money) and a legal detriment to Ms. Davies (paying more than her standard rent). This mutual exchange of promises creates a binding agreement.

• Example 3: A Sale of Goods

  A farmer, Maria, agrees to sell 50 bushels of organic apples to a local grocery store, "Fresh Foods," for $500. Fresh Foods agrees to pay Maria $500 upon delivery of the apples.

  How it illustrates good consideration: Maria's agreement to deliver 50 bushels of apples is good consideration; she is providing a tangible product (a benefit to Fresh Foods) and incurring the detriment of giving up ownership of her apples. Fresh Foods's agreement to pay $500 is also good consideration; it is providing money (a benefit to Maria) and incurring the detriment of parting with those funds. The exchange of the apples for the money constitutes good consideration, forming a valid sales contract.