Legal Definitions - informal consideration

In contract law, "consideration" refers to the mutual exchange of value that makes an agreement legally binding. It's what each party gives up or promises to give up to get something from the other party.

Informal consideration refers to a type of consideration that, while still legally valid and necessary for a contract to be enforceable, may not involve a formal written document, a large sum of money, or a highly structured transaction. It can be a simple promise to do something, a promise not to do something, or the exchange of a small item or service, as long as it represents a genuine bargained-for exchange where each party gives up something of legal value to obtain something from the other. The "informal" aspect highlights that the *form* of the consideration is not elaborate, but its legal significance remains.

• Example 1: Neighborly Exchange of Services

  Sarah agrees to lend her lawnmower to her neighbor, Tom, if Tom promises to help her move a heavy piece of furniture next weekend.

  How it illustrates the term: Sarah's promise to lend the lawnmower is consideration for Tom's promise to help her move furniture. Conversely, Tom's promise to help move furniture is consideration for Sarah's promise to lend the lawnmower. This is an informal exchange of services, but it constitutes valid consideration because each party is giving up something (the use of the lawnmower, the time and effort to help move furniture) in exchange for the other's promise.

• Example 2: Small Business Promotion

  A local bakery owner offers a coffee shop owner a small discount on daily pastry orders in exchange for the coffee shop prominently displaying the bakery's business cards and flyers near its cash register.

  How it illustrates the term: The bakery's discount on pastries is consideration for the coffee shop's agreement to display promotional materials. The coffee shop's agreement to display the materials is consideration for the discount. This is an informal business arrangement where the value exchanged isn't a direct payment for advertising space, but rather a mutual benefit that serves as valid consideration.

• Example 3: Family Agreement with Intent to Be Bound

  An elderly aunt promises her niece that she will give her a cherished antique brooch if the niece agrees to visit her every Sunday afternoon for the next six months and help with light chores.

  How it illustrates the term: The aunt's promise of the antique brooch is consideration for the niece's promise to visit and help with chores. The niece's promise to visit and help is consideration for the brooch. While family agreements can sometimes lack the intent to create legal relations, if both parties clearly intend for this exchange to be a binding agreement, the niece's regular visits and assistance, though informal, constitute valid consideration for the brooch.