Define: Consideration Clause

A consideration clause is a fundamental component of a contract that outlines the exchange of value or benefit between the parties involved. It specifies what each party will give or receive in return for their obligations under the contract. Consideration can be anything of value, such as money, goods, services, promises, or abstaining from certain actions. The consideration clause ensures that there is mutual agreement and understanding between the parties regarding the terms of the contract. In legal terms, for a contract to be enforceable, there must be valid consideration exchanged between the parties.

A contractual stipulation defining the amount and timing of payments due for a specified level of coverage under an insurance policy. Different types of consideration clauses may be used in other industries (such as real estate and stock option transactions) regarding compensation or remuneration payable under the terms of a contract.

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This glossary post was last updated: 29th March, 2024.