What does "consideration" in contract law refer to?

In contract law, "consideration" refers specifically to something of value that is exchanged between parties involved in an agreement. It is an essential element of a valid contract, as it signifies that both parties are offering something tangible—this can be in the form of money, services, goods, or even a promise to refrain from doing something.

For a contract to be enforceable, there must be consideration; without it, the agreement may not be deemed binding. This exchange creates a mutual obligation. For instance, if one party provides a service and the other agrees to pay for it, the service is the consideration provided by one party, while the payment is the consideration from the other party. This mutual exchange distinguishes valid contracts from mere promises or informal discussions that lack the binding element of consideration.