Discuss the Nature of Consideration Is Required for a Bilateral Contract

Discuss the Nature of Consideration Is Required for a Bilateral Contract

When two parties enter into an agreement, it is important that they both have something to gain from the transaction. This is where the concept of consideration comes in. Consideration refers to the exchange of something of value between the two parties, which creates a legally enforceable contract. In a bilateral contract, both parties to the agreement must provide consideration for the contract to be valid.

So, what exactly is required for consideration in a bilateral contract? Let`s take a closer look.

Firstly, consideration must be something of value. This could be money, goods, services, or even a promise to do something in the future. The important thing is that it must be something that the parties consider to be valuable enough to exchange.

Secondly, consideration must be exchanged between the two parties. Each party must give or promise to give something of value to the other party. For example, if John agrees to mow Mary`s lawn every week for a year, Mary must agree to pay John a set amount of money in exchange for his services.

Thirdly, consideration must be given voluntarily. If someone is forced or coerced into providing consideration, it is not a legally binding agreement. Both parties must enter into the agreement voluntarily and with the intention of fulfilling their obligations.

Lastly, consideration must be legally sufficient. This means that the consideration must be something that is legal and not against public policy. For example, if John promises to sell drugs to Mary in exchange for her mowing his lawn, this would not be a legally enforceable contract.

In conclusion, consideration is a crucial element in any bilateral contract. Both parties must provide something of value, exchange it willingly and voluntarily, and the consideration must be legally sufficient. By understanding the nature of consideration, parties can ensure that their contracts are enforceable and legally binding.