Consideration
The value each side gives — what makes a promise a contract.
What it means
Consideration is what each party gives or promises in exchange for the other's promise — money for work, work for money, a promise for a promise. It is one of the basic ingredients of a binding contract: an agreement where only one side gives something up is usually a gift, not a contract. The value does not have to be equal; it just has to be real.
Why it matters before you sign
If a signed document asks you for new obligations without giving you anything in return, ask what the consideration is — and whether the deal is really what you think it is.
In a contract, it looks like this
The contractor's promise to build the deck and the owner's promise to pay $12,000 are the consideration that makes the agreement binding.
This definition is a general, educational explanation — not legal advice. XOsign provides AI-assisted document tools and does not provide legal advice; consider consulting a qualified attorney for guidance on your specific situation. Requirements vary by state.
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