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Law School Help: What is Consideration?

Lawyers often toss around the term “consideration” when discussing the existence or lack of a contract. Consideration is one of the criteria that has to be proven in order to show that a contract exists. In California, consideration is defined in Civil Code section 1605 which states:

“Any benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise.”

As you can perhaps tell, consideration is not something that lends itself to a neat or simple definition. Consideration can take many forms. The common idea behind all of these forms, however, is that the purpose of consideration is to show that a party to a contract has voluntarily assumed the obligation imposed on them by the contract. Thought of another way, consideration prevents a person from accidentally falling in to a contract and being obligated to do something they didn’t intend.

Numerous other requirements for consideration are imposed by sections 1606 to 1615 (or so) of the California Civil Code as well.

In case you’re wondering, the other required elements of a contract are: (1) parties capable of entering in to a contract, (2) the consent of said parties to enter in to the contract, and (3) a lawful goal or purpose to the contract. See California Civil Code section 1550. Depending on the facts of the particular situation, all of those elements can be subject to dispute.

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Andy Chen

Andy I. Chen is a lawyer licensed to practice law in California and New York. Andy maintains offices in Los Altos, California and Modesto, California. Under the New York Court of Appeals' 2015 decision in Schoenefeld v. State of New York, Andy does not accept cases from those in New York state. He does, however, know many lawyers in New York state and would be happy to make a referral.

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