What are an Example case of consideration in the law of contract?

Answer 1

For example, if you went into a store to buy a computer for $500 then the computer is consideration from the store and the $500 is consideration from you.

Consideration simply means something of value given by each party to a contract and there must be consideration on both sides for the contract to be valid.

If the store promised to give you a free computer and later changed their mind, you could not hold them to the contract because you did not offer them anything of value - there was no consideration from your side.

Answer 2

Consideration is a promise to do or give something that you don't have to already do or give. Each party to a contract has to provide consideration. In other words, the parties need to be exchanging promises (to do something or to not do something) for a contract to be binding. And, each promise needs to be the reason for the other promise (this is called "inducement").

A simple example is a contract for the sale of a car. Party A promises to give the car and Party B promises to pay $x for it. Both parties make promises and the reason for each promise (or the "inducement") is to receive the other party's promise, i.e., Party A is induced into giving the car because Party B is paying for it. Likewise, Party B is willing to promise to pay for the car because of the promise that it will be given to him.

Courts do not typically look into the sufficiency of consideration. That's why you'll sometimes see contracts that state nominal consideration such as where Party A agrees to sell her house to Party B for $1. In a situation where the consideration is nominal, it's possible that other issues are raised. Courts have been known to invalidate contracts where the consideration was "grossly insufficient" or where they determine that one or more of the promises isn't inducement for the transaction, e.g., a court invalidated a contract where a father sold his house to his daughter for $1 although this is very rare and I there were facts in the case that made it crystal clear that there was no motivation for the transaction other it being purely a gift.

Consideration exists primarily because courts don't want to enforce gifts. Contract law is for valid commercial exchanges. If the consideration is anything, even nominal, provided the transaction is a valid commercial contract (i.e., the parties genuinely intend an exchange of promises and not a gift), it will be fine.