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Chapter 3



This chapter describes the next important element to look for after you have identified a valid offer and acceptance: consideration. In brief, consideration is a “bargained-for-exchange for something of legal value.”

  • Consideration is required: If either party to a contract has not given consideration, the agreement is unenforceable unless it falls under one of the exceptions covered in the next chapter.
  • Definition of consideration: A promise is supported by consideration if two requirements are met:

[1] The promisee (the party who’s receiving the promise being analyzed) gave up something of value, or circumscribed her liberty in some way. (This is called the “legal detriment” requirement.)

[2] The promisor made his promise as part of a “bargain”; that is, he made his promise in exchange for the promisee’s giving of value or circumscribing of liberty. (This is the “bargain” requirement.)

  • Mutuality of consideration: Each party is required to furnish consideration to the other. So if A‘s promise is not supported by consideration from B, then not only is A not bound, B is not bound either. This is the called the requirement of “mutuality of consideration.”


A. Consideration as a requirement for a contract: It is often said that for there to be a binding contract, there must be not only “mutual assent” (i.e., the offer and acceptance, discussed previously), but also something known as “consideration.” This chapter describes what “consideration” is. At the outset, however, you should be aware that consideration is not required in all contracts. Chapter 4, in fact, describes several sorts of contracts which are enforceable even though there is no consideration; these include contracts made under seal, promises which induce substantial reliance, and promises to pay for benefits received.

1. Look for consideration first: You should, however, first determine whether the contract is supported by consideration. It is only if it is not so supported that the exceptions to the consideration requirement become relevant.

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