What is Consideration (contract law)?
In short
Consideration is something of legal value that each party gives in exchange for the other's promise, such as money, goods, services or a promise to do or not do something. It is required for a contract to be enforceable.
Key takeaways
- Past consideration and promises to do what one is already legally obliged to do are not valid consideration.
- Courts generally don't examine whether the consideration is adequate.
- Under the Uniform Commercial Code, a modification of a sale-of-goods contract needs no new consideration.
Where it's tested
REG: Business Law: Contracts — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A buyer and seller of goods orally agree to increase the contract price from $10,000 to $11,000 because of a supplier cost increase. No new consideration is exchanged. Under the UCC, is the modification enforceable?