Question

What does it mean to say that a contract must have “consideration” and what is the meaning of the phrase “adequacy of consideration.”?

Answer 1

1) Cash or fee. 2) A crucial aspect in contract law, consideration is an advantage to be negotiated between the parties and is the main reason for the contracting party. Consideration shall be of interest (at least to the parties) and shall be traded by the other party for the quality or assurance of success (this performance is consideration). A consideration (what is given) is substituted for another consideration in a contract. Not doing an act (forbearance) can be consideration, such as "I'm going to pay you $1,000 not to build a road next to my fence." Often consideration is "nominal," meaning it's only specified for type, like "$10 as consideration for the conveyance of name," which is used to hide the true amount paid. Contracts may become unenforceable or rescindable (undone by rescission) for "failure of consideration" if the intended consideration is found to be less than expected, is damaged or destroyed, or quality is not properly performed (as if the mechanic does not properly run the car).

In enforceable contracts, acts that are unlawful or so unethical that they are against proven public policy can not be considered. Examples: pornography, illegal gambling, hiring someone to break a skater's leg, or causing someone to breach an agreement (talk someone out of a pledge to back up).

By law, adequacy of consideration means that in order to reach a legal arrangement among two parties, the offeror, also known as the beneficiary, should pay a fair price in exchange, which is either in equal measure or proportionate to the value given by the offeror, also known as the benefactor. Nonetheless, the price can come in several ways:

• An act
• A promise to perform or not to perform an act
• Property
• Money

For example, when you offer to sell your house to someone at $50,000 and offer services worth that amount in return, then consideration is considered adequate.

Besides a criterion, a contract agreement, a binding offer and approval are mandatory for any court to enforce a contract. In fact, consideration ensures that the promises made by one party to another are executed in a manner appropriate to the law. Although insufficient consideration is not void in a written contract, it can make a contract unenforceable.