Define: Adequate Consideration

Adequate consideration refers to the exchange of something of value between parties in a contract. In order for a contract to be legally binding, there must be adequate consideration provided by each party. Adequate consideration can be in the form of money, goods, services, or even a promise to do or refrain from doing something.

The concept of adequate consideration ensures that both parties have a mutual understanding and benefit from the contract. It prevents one party from taking advantage of the other by requiring a fair exchange of value. For example, if Party A promises to pay Party B $500 in exchange for a laptop, both parties have provided adequate consideration.

However, the law does not require consideration to be equal in value. It only requires that there is some form of exchange between the parties. As long as each party receives something of value, the consideration is considered adequate.

Adequate consideration is an essential element of a valid contract and is often scrutinized by courts to determine the enforceability of a contract. If a court finds that there was no adequate consideration, the contract may be deemed unenforceable. Therefore, it is crucial for parties to ensure that they provide and receive adequate consideration when entering into a contract.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March 2024.