Valuable consideration broadly refers to a sufficient price paid by a party in exchange for something in a contract or sale. The “valuable” description of consideration also may mean that the consideration is monetary in contrast to other payment such as services or agreeing to forbear legal remedies.
Valuable consideration most commonly arises regarding contracts. In order for a contract to be legally binding, a person must give consideration for the object, service, or other purpose being negotiated in a contract. Governments for centuries have required consideration for contracts to be considered enforceable because they do not enforce gifts. Courts typically do not enforce gifts because of lack of proof and a general agreement that people can change their minds on making a gift. To distinguish a contract from a gift, the contract must involve consideration, showing each party paid something in return for what they receive. Consideration can come in many forms and does not have to be equal in value, but rather, the consideration cannot be a miniscule consideration, effectively masking a gift as a contract. For example, a court likely would not find a person agreeing to clean a computer screen as sufficient consideration for receiving a brand new MacBook. Valuable consideration in contracts means any consideration that sufficiently compensates for the exchanged products or services to be considered a binding contract.
Valuable consideration as a terminology can also arise in situations of fraud. Many types of fraud are achieved by an entity being paid much more than what they sold. An exchange where valuable consideration was not given may help prove different crimes, especially those involving fraudulent conveyance.
[Last updated in April of 2022 by the Wex Definitions Team]
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