One of the necessary elements to create an enforceable contract is consideration, which is based on the concept of a “bargained for exchange.” This means that both parties to the contract are getting something of value in exchange for giving something of value. Consideration is not always monetary. It can be anything of value, such as a product or service. Further, that thing of value may be provided to a third party at the direction of a party to the contract. It can include affirmatively taking an action, such as paying a certain amount, providing a specific service, or delivering a certain product. It can also include an agreement not to take any action regarding a specific issue. However, regardless of the type of consideration provided, it must generally be “fresh,” meaning that the consideration must be something of value that has not already been provided in the past. When enforcing a contract and reviewing the issue of consideration, courts will generally not determine whether the parties got a fair deal, but whether they got “something” of value. Whether the consideration received was objectively “fair” is usually irrelevant, as long as some consideration was present. While the possible forms of consideration are very broad, illegal conduct or acts against public policy cannot serve as sufficient consideration to create an enforceable contract. For more information on preparing or reviewing an enforceable contract and/or to assure the existence of consideration therein, call the Business Law Group today and speak to an attorney.
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