JD Next Practice Exam

In legal terms, what constitutes "consideration" in a contract?

1. A benefit exchanged between parties

2. A verbal agreement made in confidence

3. Any promise made without exchange

4. A unilateral promise not requiring acceptance

The correct answer is: A benefit exchanged between parties

In the context of contract law, consideration refers to something of value that is exchanged between parties involved in a contract. This value could be a benefit, a right, or a detriment incurred by one party, which serves as the basis for a binding agreement. The principle of consideration underscores the need for each party to offer something that induces the other party to enter into the contractual arrangement. The concept ensures that there is a mutual exchange, which is fundamental for the enforceability of a contract. Without consideration, a promise is often viewed as a gift rather than a binding commitment, making it unenforceable in a court of law. Therefore, the accurate identification of consideration in this scenario aligns with the notion that a benefit exchanged between parties establishes a legal obligation, forming the foundation of a valid contract.