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Four Facts About Consideration Contract Law Requires You To Know

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One of the most essential components of an agreement that you can enforce in court is consideration. A promise to paint your neighbor’s fence might be a friendly gesture comparable to a gift. If you add the fact that your promise to paint the fence was made in exchange for your neighbor’s promise to do repairs on your car, the nice gestures might be the consideration contract law recognizes as supporting a legally enforceable agreement.

Consideration is more than simply the payment of money in exchange for something whether it is services or goods. There are other forms of consideration that are not as easy to recognize as agreeing to pay $100 in exchange for a tire for your car. Consideration is what you give in exchange for what you get from the other party to the contract.

Promises, promises

Sometimes, the consideration for a contract takes the form of a promise in exchange for a promise. This creates what lawyers refer to as a bilateral contract or a bilateral agreement.

The promise to paint your neighbor’s fence would be a gift were it not for your neighbor’s promise to fix your car. Here you have a promise given in exchange for a promise, so a legally enforceable contract has been created. If you do not paint your neighbor’s fence, you could be sued by your neighbor for breach of contract.

When promises give way to actions

When you agreed to pay $100 for the tire for your car, it might seem to be a bilateral contract, but it is not. Your offer to pay for the tire creates a unilateral contract because you are giving money in exchange for a tire. The consideration in a unilateral contract is a promise in exchange for an act. The promise is the offer of $100 upon receipt of the tire, or a promise for an act.

Giving something up as consideration for a contract

If your wealthy uncle asks you to stop smoking cigarettes for a year in exchange for his promise to give you $1000, your first thought might be: “What is he getting out of this.” Your promise to quit smoking is based upon your uncle’s promise to pay you the money, so it is an agreement you can enforce in court assuming you make it through the year without smoking.

Past consideration is really no consideration

Consideration must be something promised or performed now or in the future, but it cannot be something you did in the past. For example, instead of asking you to quit smoking, your rich uncle promises to give you $1,000 for helping him last year when he was moving. A couple of weeks go by, but your uncle does not give you the money. Unfortunately, there is not too much you can do because the promise to pay you in consideration for your good deed last year is a past consideration, so the agreement is unenforceable.

Understanding the concept of consideration contract law requires for a legally enforceable agreement can be difficult. An attorney might be able to answer your questions and concerns.


This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

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