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Value consideration is an exchange of valuable items or promises in a legally enforceable contract. This can include money, physical labor, or a promise of performance. As long as both parties find the consideration valuable and no coercion or fraud is involved, the contract is valid. However, the consideration must also be permitted by law, and illegal activities cannot be promised in a legally enforceable contract.
Value consideration is an exchange of items of value in connection with a contract that makes the contract legally enforceable. A simple example of this concept can be seen in an agreement to sell a car. One party gives up a car, a valuable item, in exchange for money, also a valuable item. In this case, the contract includes valuable consideration for both parties and is legally enforceable. If one person offers a car and the other offers nothing, there is no such consideration on one side and the contract may not be valid.
The concept of consideration, an exchange of some sort of value in a contract, has been part of contract law for a long time. Historically, nominal value contracts, where the value was more minimal, were considered legal. Today it is more common to require contracts to include an element of value.
Money and valuables aren’t the only things considered a form of value consideration. It can also take the form of a performance of some kind or a promise of performance. Benefits can include anything from physical labor provided by a contractor to an insurance company’s promise to pay for a car to be replaced in the event it adds up in an accident. Similarly, if someone donates a car to charity in exchange for a tax credit, that’s a valuable form of consideration. In all these cases, one party somehow pays for the performance and the other provides it, making both parties equally legally invested in the contract.
As long as the consideration is of value to the people in the contract, then the contract is valid. Thus, an outsider might see an exchange that seems unequal, but if the parties are satisfied and no one is coerced, it still meets legal enforceability standards. However, if a party is forced into a contract or fraudulent information is used as the basis for the contract, it can be challenged in court.
The phrase “good and valuable consideration” is sometimes used in the law. This is used to refer to the fact that in addition to being something of value, something that is used for consideration must be permitted by law. People cannot promise to engage in an illegal activity or offer to sell something illegal in a legally enforceable contract. Thus, a drug dealer who is burned by a contact who fails to pay for a delivery cannot sue for breach of contract, because the contract did not result in both good and valuable consideration.
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