Legal Definitions - legal consideration

Legal consideration is a core concept in contract law that refers to the "bargained-for exchange" between parties entering into an agreement. For a contract to be legally binding and enforceable, each party must provide something of value to the other. This "something of value" doesn't necessarily have to be money; it can be a promise to perform an act, a promise to refrain from doing something, or the actual performance of an act. Essentially, it's what each party gives up or promises to give up in exchange for the other party's promise or action, making the agreement more than just a casual promise or a gift.

• Example 1: Service for Payment

  A small business owner hires a web designer to create a new website for their company for a fee of $3,000. The web designer agrees to complete the project within two months.

  How it illustrates legal consideration: In this scenario, the web designer's legal consideration is the promise to design and build the website. The business owner's legal consideration is the promise to pay $3,000. Both parties are giving something of value (a service and money, respectively) in exchange for the other's promise, forming a legally enforceable contract.

• Example 2: Forbearance (Refraining from an Action)

  A landlord agrees to reduce a tenant's monthly rent by $100 for six months if the tenant agrees not to host loud parties in their apartment during that period, which is a right they might otherwise have under their lease (within reasonable limits).

  How it illustrates legal consideration: The landlord's legal consideration is the promise to reduce the rent. The tenant's legal consideration is the promise to refrain from hosting loud parties. The tenant is giving up a potential right or freedom of action, which constitutes legal value in exchange for the reduced rent, making the agreement binding.

• Example 3: Exchange of Goods

  Two collectors agree to trade items: one collector promises to give a rare baseball card to the other, who in turn promises to give a vintage comic book of similar value.

  How it illustrates legal consideration: Here, the legal consideration from the first collector is the rare baseball card, and the legal consideration from the second collector is the vintage comic book. Each party is providing a tangible item of value to the other in exchange for their item, establishing the necessary consideration for a valid contract.