Contract Law

What Makes a Contract Valid?

Consideration

Consideration, in contract law, means whatever is required by the terms of a contract to be done by either party for the other. It could be the transfer of money, goods, services, or anything with a value to it. The terms which define the main consideration, that is the basics of the two way relationship, are called the conditions or express terms of the contract. (See later)...

 

The rule is that for a contract to be valid there must be some sort of sacrifice by one party resulting in some sort of benefit to the other. This is a two way street! When there is some ostensible benefit, this is called ‘valuable consideration.’ The term, valuable consideration, does not presuppose great value, just some value. Some old cases referred to a peppercorn as an example of valuable consideration of negligible yet relevant worth. They mean literal peppercorns, which were a form of currency in centuries past.