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Consideration
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Consideration

Consideration is a central concept in the common law of contracts. It is often called the thing that is exchanged, no matter how minuscule (the classical example being the peppercorn or mustard seed). Consideration can take the form of money, goods, a promise to do something, or anything else that changes the legal position of the promisor. A contract cannot exist without consideration being given by both sides.

Legal analysis of consideration focuses only on a bargained exchange, in other words, only items that are specifically bargained for in the contract can be used as consideration. This protects each party from being sued for something unrelated to the exchange in question.

A contract can only exist if the consideration is both sufficient and adequate. Legal sufficiency of consideration means that both parties suffer a detriment because of the transaction, in addition to any benefit they may or may not receive. Legal adequacy of consideration is more difficult to contest. In general, the courts consider the question of adequacy irrelevant, according to the rationale that if you agreed to the contract, it must have been adequate to you. An exception is made in the case of "dishonesty or unfairness which shocks the conscience of the court."

Certain other stipulations regarding consideration include the following:

While the concept of consideration is not generally accepted in civil law systems some recognize the similarity between consideration and cause, as some civil codes recognize that all contracts must have a cause, though this is not generally accepted.