What counts as consideration in contract law
Consideration is a bargained-for exchange of legal value between the parties. Each party must give something up (detriment) or receive something in return (benefit), and the exchange must be sought by the other party as the price of the deal. Money is the classic consideration, but so are services, goods, promises to act or refrain from acting, or even the surrender of a legal claim. The law does not require that consideration be equal in economic value; a one-sided deal with unequal consideration is still binding if both sides accepted the bargain.
Consideration must move in both directions. A promise without return commitment is a gift, not a contract. If one party promises to perform but the other gives nothing, the promise is generally unenforceable absent other doctrines like promissory estoppel. The test is whether the promisee induced the promise by offering something the promisor wanted.
Invalid consideration and exceptions
Past consideration is not consideration because the benefit was conferred before the promise was made, severing the bargain. If a person saves another from drowning and later asks for payment, the promise to pay is unsupported by consideration. Similarly, a pre-existing duty does not constitute consideration. A police officer cannot promise to perform the duties already imposed by employment in exchange for a bonus, though some jurisdictions recognize an exception if the officer assumes additional risks beyond the original scope.
Moral obligation alone is insufficient consideration. A promise to pay a debt barred by the statute of limitations is sometimes enforceable if the debtor reaffirms the debt in writing, but the reaffirmation is supported by the prior obligation, not new consideration. Courts also reject illusory promises, where one party retains unlimited discretion to avoid performance. A promise to buy 'as much as I want' is illusory because the promisor could choose to want nothing.