In contract law, what does "consideration" refer to?

In contract law, "consideration" refers to something of value that is exchanged between the parties involved in a contract. This is a fundamental element required for a contract to be legally binding. Consideration can take various forms, such as money, services, goods, or a promise to refrain from certain actions. It essentially represents the benefit or value that each party gains from the contract, making the agreement mutually beneficial.

For a contract to be enforceable, consideration must be present; without it, there may not be a legally binding agreement. This requirement serves to distinguish enforceable contracts from mere promises or informal agreements that lack any exchange of value. Therefore, understanding consideration is crucial for anyone studying contract law or engaging in commercial contracting.