What are the legal rules as to consideration of a contract?

Law of contracts differ from country to country to some extent. However most of the countries similar general provisions in their laws of contract. The following discussion pertains to general nature of law of contract rather than exact legal provisions of any one law of contract.

The following are rules relating to law of contract in general.

• A contract is valid only if it is for mutual consideration. This means the contract must be for exchange of things of value. Both parties of contract must give something of value, and in return receive something of value.


• Generally there are no restriction on adequacy of the consideration. However, some courts/countries do not accept just notional consideration included in contract just to satisfy the legal provision.


• Consideration can include some physical object or promise to perform some specific action.


• Acts that a party is required to perform as a an existing legal obligation is not considered a valid consideration.


• Legal valueless consideration may be bundled with other valid consideration.


• Consideration provided in past is not valid as a consideration for forming new contracts.


• Consideration can be conditional. That is there may be an initial part of the contract with a valid consideration, with subsequent additional contracts with additional consideration which becomes applicable under certain specified conditions.