contracts

consideration

Consideration is something of value that each party gives or promises in exchange for the other's promise, and it is an essential element of a valid contract. It may be money, property, services, or a promise to act or refrain from acting. Valuable consideration has monetary value, while good consideration is love and affection, often used in gift deeds. Earnest money is not required for consideration.

Exam tip: Remember that a promise can itself be consideration, so earnest money is not legally required for a valid purchase contract. Good consideration (love and affection) differs from valuable consideration.
Example: A buyer promises to pay $300,000 and the seller promises to deliver a deed; the exchanged promises are the consideration for the contract.

1. A buyer agrees to give the seller a valuable painting in exchange for vacant land. Is there valid consideration?

Answer & explanation

Answer: D. Consideration is anything of value exchanged. A $0 purchase price would lack consideration, but goods or services can qualify.

Related terms & state variants

earnest money good consideration valid contract valuable consideration

Sources

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Last verified: 2026-10-23