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Considerationl How to explain thelegal concept ofconsiderationl How to explain thetypes of considerationl How to identify certainproblems regardingconsiderationl How to identify theprinciples that apply toconsideration ineveryday lifeBy understanding theconcept of consideration,you will be able to avoidproblems that frequentlyresult when agreementslack this importantcontractual element.l gratuitousl considerationl benefitl detrimentl forbearancel bargained-forexchangel unconscionablel releasel accord and satisfactionRequirements of ConsiderationThe law has always refused to enforce most gratuitous , or free,agreements. The terms of an agreement must be bargained for if they areto be binding on the parties. An agreement is bargained for when eachside is compelled to surrender something of value in exchange for somethingelse of value. This exchange, or the promise to exchange things ofvalue, is what binds the parties to each other in a contractual relationship.This binding element is known as consideration.Consideration distinguishes a legally binding agreement from othertypes of agreements. Many agreements are not legally binding becausethey lack consideration. For instance, social agreements that contain anoffer and an acceptance, such as an agreement to accompany someoneto the homecoming dance, are not contracts. Because of the centralimportance of consideration to all contractual relationships, it is crucialto understand the nature of consideration.The Legal Concept of ConsiderationConsideration is the exchange of benefits and detriments by partiesto an agreement. A benefit is something that a party was not previouslyentitled to receive. A detriment is any loss suffered. There arethree types of consideration. The first type of consideration involvesgiving up or promising to give up something that you have the legalright to keep. The second type involves doing something or promisingto do something that you have the legal right not to do. The final typeof consideration, which is known as forbearance , is not doing somethingthat you have the legal right to do.The Characteristics of ConsiderationWhen we began our study of contracts, we noted that all contractshave certain characteristics. The same is true of consideration. Considerationhas three key characteristics:l Promises must involve the concept of a bargained-for exchange .l Something of value must be involved.l The benefits and detriments promised must be legal.164 Unit 2: Entering Into ContractsBargained-for Exchange The law supports agreements that havebeen bargained for. An agreement involves a bargained-for exchange