In contract law, the value exchanged between parties is known as what?

In contract law, the value exchanged between parties is referred to as consideration. Consideration represents the benefit that each party receives or expects to receive when entering into a contract, which is essential for a contract to be legally binding. This concept ensures that there is a mutual exchange that justifies the contract formation, distinguishing it from mere gifts, which lack this element of exchange.

For a contract to be enforceable, there must be clear consideration, which can be in the form of money, services, goods, or a promise to refrain from an action. This mutual exchange underscores the agreement's value and the parties' commitment to fulfilling their respective obligations. Thus, consideration is a crucial element in validating any contractual relationship.