something of value voluntarily exchanged by parties to an agreement, making the agreement a legally binding contract on all of the parties involved. In banking, the lending of money in exchange for a borrower's promise to repay the loan, put up collateral, or both. A lender cannot take a lien without advancing funds to the borrower.
- under contract law, something of value exchanged for a promise or for performance; needed to make an instrument binding on the contracting parties.
- adherence to all provisions of an insurance policy by an insured; the insured agrees to make all premium payments when due in order to maintain a policy in full force.
- payment for an annuity.
something of value that one party gives to another in exchange for a promise or act. In law, a requirement of valid contracts. A consideration can be in the form of money, commodities, or personal services; in many industries the forms have become standardized.
- under contract law, anything of value exchanged for a promise or for performance that is needed to make an instrument binding on the contracting parties.
- adherence to all provisions of an insurance policy by an insured; for example, the insured agrees to make all premium payments when due in order to maintain a policy in full force.
- payment for an annuity. See also insurance contract, life; insurance contract, property and casualty.
anything of value given to induce entering into a contract; it may be money, personal services, a product, etc. Required in all contracts; must be present for a contract to be valid.
Example: Abel ran out of gasoline while driving down the highway. Baker, a passing motorist, gave him a ride to the nearest filling station. Abel promised Baker a $50,000 tract of land for his help, but Baker cannot enforce the promise because of the absence of consideration.
