In the formation of a valid and binding contract, something of worth or value that is either a detriment incurred by the person making the promise or a benefit received by the other person.
In contract law consideration is required as an inducement to enter into a contract that is enforceable in the courts. It is an essential element for the formation of a contract. What constitutes sufficient consideration, however, has been the subject of continuing legal debate. Contracts and courts generally use the term valuable consideration to signify consideration sufficient to sustain an enforceable agreement.
In general, consideration consists of a promise to perform a desired act or a promise to refrain from doing an act that one is legally entitled to do. Thus, a person who seeks to enforce a promise must have paid or obligated herself to pay money, delivered goods, expended time and labor, or forgone some other profitable activity or legal right. For example, in a contract for the sale of goods the money paid is the valuable consideration for the vendor, and the property sold is the consideration for the purchaser.
In early COMMON LAW nominal consideration was sufficient to establish a contract. The consideration could be as small as a peppercorn or a cent as long as it demonstrated that the parties intended to enter into an agreement. Eventually, the courts developed the requirement of valuable consideration, but what constitutes it has varied over time. Valuable consideration does not necessarily have to be equal in value to what is received, and it need not be translatable into dollars and cents. It is sufficient for the consideration to consist of a performance or a promise to perform that the promisor (the person making the promise) regards as having value. It is not essential that the person to whom the consideration moves should be benefited, provided the person from whom it moves is, in a legal sense, injured. The injury can consist of refusing to sue on a disputed claim or to exercise a legal right. The alteration in position is regarded as a detriment that forms consideration independent of the actual value of the right relinquished.