The most important part of any contract is consideration, without all parties agreeing to the consideration, the contract cannot be legally binding. Consideration is the price one party pays for the execution of the contract. It does not necessarily have to be a monetary consideration, even though it is usually a sum of money.

Consideration is a way to ensure both parties will benefit from the contract. So if it a contract for land for example, the consideration is the price of the land. So when the contract ends, one party will have the benefit of the land and the other will have the benefit of the money.

However, consideration could be something like an act in exchange for another act or even a contract that requires one party to refrain from doing something to benefit the other party. It is also important that the parties are in a position to offer that consideration, for example, the person selling the equipment for a road, has to have the equipment available, just as the person buying, has to have the money to pay for the equipment.

Consideration can also be executory or executed. For example, in an executed case, one party has done their half of the contract, while waiting on the other party. So this is the case when payment is made to a caterer ahead of time. The consideration, which is the cost of the catering, is already finished and then the caterer then does their half, which is the food at the event. Executory is a promise by both parties until both sides have completed.

Consideration can be inadequate, which means it is improper for the circumstances. This happens if there is an agreement for a motor vehicle for $25, when that is far less than what the car is worth. In this case, it could be considered a gift or could amount to fraud, depending on the circumstances surrounding the making of the arrangement. Inadequate consideration could result in the contract being legally unenforceable, since it could be argued that the parties did not enter the contract with an aim to be legally bound, with no real thought given to the ‘detriment’ required by both parties. Mutual and commensurate outcomes are the result of a proper contract. It would be woefully inadequate for one party to end up with a car, while the other ends up with $25.

It is important for enforceability, that the parties are getting, if not identical, but comparable outcomes from the performance of the contract.