Consideration: The Basics of Consideration and the Bargain Theory
This lesson takes a look at the basic aspects of the contractual element of Consideration. In a typical transaction, the consideration (described as a bargained-for-exchange) is what induces the making of the promise by the offeror. In turn, the promise induces the furnishing of the consideration by the offeree. Consideration is the ordinary means for justifying the enforcement of the promises by the parties. This lesson sets out the basic requisites for establishing consideration.
On completion of the lesson, the student will be able to:
1. Explain the meaning of "bargained-for exchange."
2. Give an example showing how consideration can be for the benefit of a third party.
3. Explain the concept of "adequacy of consideration."
4. Define "nominal consideration."
5. Explain how consideration applies to option contracts.
6. Give an example of consideration for multiple promises.