What Is Consideration for Agreement

As a professional, I would like to shed light on the term «consideration for agreement» in legal contracts. This phrase is often used in contracts to indicate the mutual exchange of value between two or more parties.

Consideration is an essential element of a legal agreement or contract. It refers to something of value that is promised or given by one party to another in exchange for something else. In simple words, it is a benefit or advantage that each party receives in return for their promise or undertaking.

For example, in a sales contract, the buyer agrees to pay a certain amount of money in exchange for receiving the product. The seller agrees to deliver the product in exchange for the payment. In this case, the consideration is the payment made by the buyer and the delivery of the product by the seller.

Consideration does not have to be monetary. It can be a promise, performance, or even refraining from doing something. For instance, in a non-compete agreement, an employee agrees not to work for a competing company in exchange for continued employment or severance pay. The consideration in this case is the promise made by the employer to provide continued employment or severance pay, and the promise made by the employee to refrain from working for a competitor.

In addition to being an essential element of a contract, consideration also helps to establish the intention or mindset of the parties. It shows that each party intended to enter into a binding agreement and was motivated by the exchange of value.

It is worth noting that consideration must be legal and not against public policy. For example, a contract to sell illegal drugs or engage in illegal activity cannot be enforced as the consideration is illegal.

In conclusion, consideration for agreement is a crucial element of a legal contract. It refers to the mutual exchange of benefits or advantages between the parties involved in the agreement. Consideration can be monetary or non-monetary and helps establish the intention of the parties. It is essential to ensure that the consideration is legal and not against public policy.