In contract law, what does "consideration" refer to?

In contract law, "consideration" refers to something of value that is exchanged between the parties involved in a contract. This exchange can be in the form of money, goods, services, or even a promise to perform or refrain from a certain action. Consideration is a fundamental element of a contract because it demonstrates that both parties have a stake in the agreement and have provided something in return for what they will receive. It establishes the quid pro quo basis of a contract, ensuring that there is a mutual exchange that legitimizes the agreement.

Without consideration, contracts may be deemed unenforceable, as there would be no incentive for parties to fulfill their obligations. Therefore, the notion of consideration is central to the formation and validity of contracts in business law.