As a small business owner, you’ve most likely read or heard the term “consideration” when reviewing and executing contracts. What exactly is consideration? And why does it matter to understand the idea of consideration in the context of a contract? Well, in order for your contracts to be enforceable, there must be consideration.
The Legal Definition
A lawyer will tell you that consideration is a bargained-for exchange of something of legal value. And “something of legal value” can vary from a promise to do (or not do) something, or creating, modifying or destroying a legal relationship. For a contract to be enforceable, there must be valid consideration.
In short, in order for a contract to be enforceable, each party must give up something…