Consideration is an essential element in contract law, which refers to something of value that is exchanged between parties to a contract. The rules of consideration require that there must be a bargain between the parties, which involves the exchange of something of value. Here are the key rules of consideration in contract law:
Consideration must be something of value: Consideration must be something of value that is given by one party to another. It can be a payment, a promise, an act, or a forbearance.
Consideration must be exchanged between the parties: Consideration must be exchanged between the parties to the contract. Both parties must give something of value to the other.
Consideration must be sufficient but need not be adequate: Consideration must be sufficient, which means it must have some value. However, it need not be adequate, which means it need not be equal in value to what is being exchanged for it.
Consideration must not be past: Consideration must not be something that has already been given or done in the past. It must be something that is given or done in exchange for a promise.
Consideration must not be illegal or against public policy: Consideration must be legal and not against public policy. For example, a contract to commit a crime or to sell illegal drugs would not be enforceable.
Consideration must be given by the promisee: Consideration must be given by the party to whom the promise is made. A promise cannot be enforced if it is made to a third party.
In summary, consideration is an essential element in contract law, and it must involve a bargain between the parties, with each party exchanging something of value. The consideration must be sufficient but need not be adequate, must not be past, and must not be illegal or against public policy.
You can learn more about this topic and relevant case law with our Contract Law notes.
