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What Is Valuable Consideration?

Valuable consideration is an exchange of items of value in connection with a contract that makes the contract legally valid.
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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 21 October 2014
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Valuable consideration is an exchange of items of value in connection with a contract that makes the contract legally valid. A simple example of this concept can be seen in an agreement to sell a car. One party is giving up a car, an item of value, in exchange for money, also an item of value. In this case, the contract includes valuable consideration for both parties and it is legally enforceable. If one person is offering a car and the other person is offering nothing, there is no such consideration from one party and the contract may not be valid.

The concept of consideration, an exchange of some sort of value in a contract, has been a part of contract law for a very long time. Historically, contracts involving nominal consideration, in which the value was more minimal, were considered legal. Today, it is more common to require that contracts include an element of valuable consideration.

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Money and objects of value are not the only things considered a form of valuable consideration. It can also take the form of performance of some kind, or a promise to perform. Performance can include everything from physical labor provided by a contractor to a promise from an insurance company to pay for replacement of a car in the event that it is totaled in an accident. Likewise, if someone gives a car to charity in exchange for a tax credit, this is a form of valuable consideration. In all of these cases, one party is paying for the performance in some way and the other is providing it, making both parties equally legally invested in the contract.

As long as the consideration is of value to the people in the contract, then the contract is valid. Thus, an outsider might see an exchange that looks unequal, but if the parties are satisfied and no one is being coerced, it still meets the standards of legal enforceability. However, if a party is forced into a contract or fraudulent information is used as the basis for the contract, it can be challenged in a court of law.

The phrase “good and valuable consideration” is sometimes used in the law. This is used to refer to the fact that in addition to being something of value, something being used for consideration must also be permitted by law. People cannot promise to perform an illegal task or offer to sell something that is illegal in a legally enforceable contract. Thus, a drug dealer who is burned by a contact who does not pay for a delivery cannot sue for breach of contract, because the contract did not involve both good and valuable consideration.

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