In contract law, what does "consideration" refer to?

In contract law, "consideration" refers to the value exchanged between parties as part of a contractual agreement. It is a fundamental element required for a contract to be legally binding, alongside offer and acceptance. Consideration can take many forms, including money, services, or goods, and signifies that both parties are contributing something of value, which helps establish a mutual benefit or detriment. This exchange distinguishes enforceable contracts from mere promises or agreements that lack legal standing.

The presence of consideration ensures that a contract is not one-sided and that there is a mutual commitment and incentive for both parties to fulfill their obligations. Without consideration, a contract may be deemed unenforceable as it suggests that one party is not providing anything in return for what they expect to receive. This concept is critical in understanding the enforceability and validity of contracts in legal contexts.