Glossary

Consideration

Something of legal value exchanged between contracting parties — a promise, payment, or performance — that is a required element for a contract to be legally enforceable.

Consideration distinguishes an enforceable contract from a gratuitous, unenforceable promise: each party must give up something of value or promise to do so, even if the amounts exchanged are unequal, since courts generally do not evaluate the adequacy of consideration, only its presence. In CRE purchase agreements, the earnest money deposit is often cited as consideration, though the mutual promises to buy and sell themselves typically suffice. Option agreements and rights of first refusal require their own distinct, separately identifiable consideration (sometimes a nominal payment) to be enforceable as a binding option rather than merely an unenforceable, revocable offer.