Frequently Asked Questions

What is the role of consideration in a legally binding contract and how is it defined by law?

Consideration plays a pivotal role in a legally binding contract. It is defined as the exchange of something of value between the parties involved in the contract. This exchange is a fundamental requirement for a contract to be legally enforceable. The party who makes the offer gains a benefit, while the party who accepts the offer incurs a corresponding cost. According to the law, the consideration only has to be sufficient, meaning the party is only required to give something valuable as a result of the offer.\ In the context of a contract, consideration is the promise to do something that a party is not legally required to do, or the promise to refrain from doing something that a party is legally allowed to do. This exchange of promises or actions forms the basis of the contractual relationship and is what binds the parties to the terms of the contract. Without consideration, a contract may not be enforceable. This is because consideration is seen as the price paid for the promise of the other party, and it is this exchange that the law deems worthy of enforcement. Therefore, if a contract lacks consideration, it may be deemed unenforceable due to it being a gratuitous promise rather than a contractual obligation.