Types of Consideration in Contract Law

Types of Consideration in Contract Law

There are various types of consideration: Executory consideration, Bargained for exchange, and Unreal or irrational consideration. Let’s discuss these types of consideration and what they mean in law. Consideration may also be performed by another party or a stranger. If the act is performed per the promisee’s wish, it qualifies as consideration. In general, however, it’s best to consider the intent of the parties before deciding on which type to use.

Executory consideration

An executory consideration is a promise given in exchange for an act or promise to be performed later. For example, if you promise to deliver something to another person, they will pay you when you’ve delivered the item. If you fail to do so, your promise becomes void and you may end up facing a lawsuit. Executory consideration is a valuable part of a contract because it allows both parties to get what they want later.

Executed consideration

In contract law, executed consideration is the amount of money given in return for the performance of an act. This act forms the basis for the contract. Until the act is performed, the consideration does not exist. Otherwise, a subsequent promise cannot be made without the first one’s performance. The execution of consideration occurs in two types of contracts: trusts and sales. Whether the consideration is money or something else depends on the nature of the contract.

Bargained-for exchange

A bargain is an agreement between two parties where the parties have agreed to exchange a promise or something of value in exchange for performance. Under the bargained-for exchange rule, a promise must be accompanied by a return promise. This must be mutually beneficial, and both parties must have the intention to induce the other to perform or provide something of value in return. When both parties agree to exchange a promise, the exchange of value is complete, and the bargained-for value becomes the basis for enforcement.

Part payment

In contract law, part payment or consideration can be sufficient to discharge a debt. Consideration is a value exchanged between two parties that benefits one party while causing a detriment to the other. A part payment can satisfy a debt only if the value exchanged is less than the amount of debt owed. The same is true of part payments of debt. Parties can agree to accept part payment of a debt when they are willing to accept it as part of the whole.


A gift is an agreement between two people that involves the exchange of something of value. A gift has a legal validity if it is delivered with a valid consideration. A gift is only valid if it is delivered to the donee, or someone for whom it is intended. To be considered a valid gift, the giver must deliver the object in question or make it available for the donee to receive. A gift that is not delivered with a valid consideration is a gratuitous gift.

Legally sufficient consideration

What constitutes “legally sufficient consideration?” For the purpose of establishing a contract, a deal or contract must have something of value that is measurable or observable. In other words, the consideration must be of a value to the parties, and it must be “bought” or “bargained for” by each party. The amount of money or goods that are “bought” by one party must be greater than the value of the promise or obligation to be performed by the other. The amount of consideration can be very small, but must be substantial to support the contract.