Consideration basically means that the parties to the contract have each bargained for something that has legal value. In other words, the parties have obtained something that is either beneficial to their positions or detrimental to their positions.
Let’s use a hypothetical to demonstrate this concept:
Rick promises to pay Kristi $1,000.00 if she quits smoking. Here, there is a bargain because Kristi quits smoking as a result of Rick promising to pay her a sum of money. Additionally, there is legal value in the contract because both Rick and Kristi incur a detriment. Once Kristi quits smoking, Rick must pay her $1,000.00. In other words, he is required to give up money that belongs to him. With regard to Kristi, she is incurring a detriment because she is legally entitled to smoke (assuming she is over eighteen years of age). By giving up something that she is legally entitled to do, she is incurring a legal detriment. In conclusion, there is a valid oral contract between Rick and Kristi, with a valid offer, acceptance of that offer, and valuable consideration.
Finally, let’s wrap up what we’ve talked about with a few key points to remember.