According to Section 2(d), the following are the basic characteristics of a valid consideration: 1 It is offered "at the wish of the promisor"; 3 It might be past, present, or future consideration; and 4 It must be genuine and valuable. Consideration is any benefit to the person making the promise (the promisor) for which he is also obligated to do something (the promise). The obligation may be expressed in words or may be implied by law (as in contracts for services). It is not essential that the consideration be monetary; anything that acts as consideration will do so. For example, if I agree to clean your house in return for you cleaning my garage, that's consideration. If I give you a gift but expect in return that you buy me dinner when I come to town, that's consideration.
Even though consideration is a requirement for all agreements, it doesn't mean that anything goes. The consideration must be adequate. This means that it should be sufficient to motivate a reasonable person in the promisor's position to make the promise. Generally, consideration needs to cover at least two things: 1 The promise must lead to a legal relationship, such as contract or agency; and 2 The promise must lead to some actual change in position by the other person (which may be either an actual loss or gain).
If b is right, the three critical consideration factors are bargained-for exchange, legal sufficiency, and determinable commitments (that is, promises that are capable of being objectively determined). Section 4.2 of the Hornbook.com Legal Dictionary states that consideration has three essential elements: a benefit to the promisor, a detriment to the promisee, and an act by the promisee that gives rise to a duty to the promisor.
The act of giving something up or suffering some loss will usually be sufficient consideration for a simple contract. However, if you want your contract to be binding, you will have to give more than this; for example, you could give up another contract with another person or entity in order to get a better deal from the first person you contracted with. The benefit must go to the promissory party; for example, if I contract with you and you fail to deliver the goods, you cannot claim consideration since you received no benefit from my contract with you.
A detriment to the promisee is not necessary for a contract to be valid. For example, if I offer you $10,000 on one condition: that you do not tell anyone about our agreement, we have created a contract even though you gave me nothing up. You suffered no loss since you got the money and you also gave me something up since I did not tell anyone about our agreement.
The compensation offered for the promise might be an act, a promise not to act, or a commitment to do both. As a result, there are two fundamental factors to consider: (1) legal sufficiency (anything of legal value) and (2) negotiated for exchange (something the parties agree will serve as consideration).
In other words, consideration must exist for a contract to be binding on the parties. There can be no agreement to perform an act without some consideration to support such an agreement. Consideration can be either a benefit to the promisor or a detriment to the promisee. It is essential that any consideration given in exchange for your promise be adequate to support a contract; otherwise, you are just entering into a meaningless agreement.
For example, if I offer to pay you $10,000 if you will drive across town at 5 o'clock tomorrow afternoon, this is not sufficient consideration to support a binding contract because I get nothing out of it except the obligation to drive across town at 5 o'clock tomorrow afternoon. However, if I give you $10,000 now in return for your promise to deliver water to my house every day at noon for one year, this would constitute sufficient consideration to support a binding contract because I get something valuable in return - the delivery of water - even though I have to pay you now with no immediate benefit.