Considerations, which are frequent in business law, are one of the most important elements of a contract. The definition of a consideration is based on the legal concept of “bargained-for exchange.” According to this mechanism, each party involved in the contract receives a certain benefit in exchange for something of value. Considerations may also relate to the promise that you will not do something you have the legal rights to do, or alternatively, the promise that you'll do something that you have the legal rights not to do. As considerations are one of the main components of a valid contract, contracts without considerations may not be deemed binding.
Contracts play a major role in our everyday life. Whether you have agreed to do something in exchange or a payment, purchased something in a store or rented an apartment, chances are, you have entered into plenty of contracts in your lifetime. According to United States contract law, in order for a contract to be enforceable and binding, it must include all six of these elements:
When it comes to valid contracts, offer and acceptance come as a packaged deal. According to these concepts, a contract is initiated by one party making an offer and another party choosing to accept the offer. The value given for the offer and acceptance can then be defined as the consideration.
Since these legal terms can seem quite confusing, let’s take a look at a simple example of considerations in contracts. Suppose that someone offers to sell their car to a friend for $10,000. If the friend accepts the offer, the $10,000 will serve as consideration for the car.\
It should be noted, however, that economic benefit is not necessarily required for a consideration to be enforceable. U.S. federal law recognizes various types of considerations, including providing a service, giving up an existing benefit or refraining from engaging in a particular activity or benefit.
Contracts are prevalent in a number of fields in business law. Therefore, all business owners, whether they run a large corporation or a small business, should be familiar with the concept of considerations. Having your contract reviewed by a professional attorney might be helpful if you're unsure whether a consideration element is included. In any case, you should always have an experienced lawyer look over any important contracts before signing them. Get in touch with one of our top tier attorneys today at Attorney At Law.