Regardless of the type of contract you sign, you`ll likely hear the term « consideration. » In addition to the offer and acceptance, « consideration » is one of the essential elements of a contract. But what does this really mean? It should be noted that a promise to do something illegal or immoral does not serve as a valid consideration. Existing employment obligations depend to a large extent on State law. In general, all-you-can-eat employment allows the employer to fire the employee forever or even for no reason (as long as the reason, if any, is not expressly illegal) and allows the employee to dismiss for any reason. There is no obligation to continue working in the future. So if an employee asks for a raise, there is no problem with the consideration because the employee has no legal obligation to continue working. Similarly, if an employer requires a reduction in wages, there is also no contractual issue with consideration, since the employer is not legally required to continue to employ the employee. However, some States require additional compensation in addition to the prospect of continued employment in order to enforce the conditions required by the employer in the future, in particular the non-compete obligations. For example, if A B offers $200 to buy B`s villa, luxury sports car, and private jet, there are still considerations on both sides. A`s consideration is $200, and B`s consideration is the villa, car, and jet. In the United States, courts generally leave their own contracts to the parties and do not intervene. The old English rule of consideration asked whether one party gave the other party the value of a peppercorn.
As a result, contracts in the U.S. have sometimes resulted in a party providing nominal consideration, typically citing $1. Thus, licensing agreements that contain no money at all often quote in return, « for the sum of $1 and other good and valuable considerations. » On the other hand, if you tell your neighbor that you will give her the bike if you can`t sell it at your flea market, there is no consideration because she has not agreed to pay you anything. His promise to give him the bike may be a binding promise, but it is not an enforceable contract. Consideration is usually not an element of a gift. Suppose A is a film screenwriter and B runs a film production company. A said to B, « Buy my script. » B says, « How about that – I`m going to pay you $5,000 so your film won`t be produced for another year. If I produce your film this year, I will give you $50,000 more, and no one else will be able to produce it. If I don`t produce your film this year, then you can leave. If the two subsequently come into conflict, the question of whether a contract exists is answered.
B had an option contract – he could decide if he wanted to produce the script or not. B`s counterpart was the downward amount of $5,000 and the possibility of $50,000. A`s counterpart was the exclusive rights to the film script for at least one year. Long court cases and writings abound on the subject, which is a consideration. In short, there are two other important things to know. First, the consideration does not have to be money. It can be something of value, so it can be another object or service. Suppose B commits an offence against A that causes $5,000 in damages and $3,000 in punitive damages. Since there is no guarantee that A would win against B if he went to court, A can agree to drop the case if B pays the $5,000 in damages. This is sufficient consideration because B`s consideration is a secured recovery and A assumes that B only has to pay $5,000 instead of $8,000.
The legal definition of counterparty is based on the concept of « negotiated exchange ». This means that both parties get something they have agreed, usually something of value for something of value. If there is no consideration in a contract, the contract becomes invalid and the courts may refuse to perform the contract. Sometimes a contract lacks consideration, although at first glance it seems that the parties are exchanging something of value. In Currie v. Misa , the court stated that consideration was a « right, interest, profit, advantage or abstention, disadvantage, loss, liability ». Therefore, the consideration is a promise of something of value given by a donor in exchange for something of value given by a promisor; And generally, the question of value is a good, money or a stock. Act with indulgence, . B as an adult who promises to quit smoking, is only enforceable if you thus waive a legal right.    At common law, it is necessary for both parties to provide consideration before a contract can be considered binding.
The doctrine of consideration is not relevant in many jurisdictions, although current business relationships have viewed the relationship between a promise and an act as an expression of the nature of contractual considerations. If no consideration is found, no contract is concluded. However, some courts in the United States may challenge a nominal consideration or a virtually zero consideration. Some courts have since considered this a deception. Since contractual disputes are usually resolved by state courts, some state courts have concluded that the mere provision of $1 to another is not a sufficient legal obligation, and therefore there is no legal consideration in this type of business, and therefore no contract is concluded. However, this is a minority position.  In most states, a contract is only recognized as valid and enforceable if it involves an exchange of consideration between the parties. Consideration can be defined as a right, interest or benefit granted by one party to the other party. This is sometimes called the counterpart. The exchange of consideration causes or motivates each party to conclude the contract. The consideration may be as large or small as the parties mutually agree to an exchange between them.
For example, if you buy a dress, it is between you and the seller to agree on the price. When there is a valid consideration, the courts rarely intervene to decide whether the agreement is unfair or disproportionate. However, if a party is trapped in an unfair business by hiding important information or acting in bad faith, this can affect the legal validity of the contract. Systems based on Roman law (including Germany  and Scotland) do not need to be taken into consideration, and some commentators consider this unnecessary and have proposed abandoning the doctrine of consideration and replacing it as the basis of treaties.  However, legislation, not judicial development, has been presented as the only way to eliminate this deep-rooted common law doctrine. Lord Justice Denning said that « the doctrine of consideration is too entrenched to be overturned by a crosswind ».  Most contracts contain one or two lines indicating that valid and sufficient consideration is the basis of the contract. However, the mere mention of something in the contract does not prove the existence of a valid consideration. Similarly, consideration does not become invalid if it is not mentioned in the contract. No consideration can be given in the form of money, goods, promises, services or anything else.
It can be something as simple as a promise to do or not to do something. For example, if you enter into a contract with your neighbour in which he agrees not to sue you for the damage you caused to his property, and you agree in return to pay him $800, then the amount of $800 is the consideration your neighbour receives, while his promise not to sue you is the consideration you receive from the contract. Consideration can be seen as the concept of value offered and accepted by the persons or organizations that enter into contracts. .