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What does in consideration of mean in a contract?
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In this article, I will break down the meaning of In Consideration Of so you know all there is to know about it!
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Table of Contents
In Consideration Of Meaning
You’re looking to sign a contract and you see the phrase “in consideration of” and wonder what it means.
In essence, “in consideration of” means “in exchange for something” or a “benefit” or a “payment” of some kind.
For example, John provided Mary with the services in consideration of the payment of $1,000.
This means that John rendered his services in exchange for a payment of $1,000.
As a result, the literal meaning of “in consideration of” is “in return for” or “in exchange for”.
In common English, consideration could mean a few things.
One meaning of consideration is to compensate someone.
In other words, a recompense.
For example, the client offered substantial consideration for the services obtained.
Consideration can also refer to payment.
For example, the acquirer paid cash consideration to acquire the target company.
This means the acquirer made a cash payment to acquire the target company.
In Consideration Of Alternatives
What can you use alternative phrases to say the same thing as “in consideration of”?
Here are some alternatives to the phrase in consideration of:
- In exchange for
- In payment for
- In light of
- Considering that
- In view of
- In return for
- Because of
- Taking into account
- On account of
- Seeing that
Consideration In Law
In contract law, consideration represents a key element for valid and enforceable contracts.
For a contract to be legally valid, there must be an offer, acceptance, consideration, legal capacity, and legality of scope.
Offer is when a party proposes to be bound in a legally binding contract to do something in exchange for something.
Acceptance is when the person receiving the offer accepts the offer.
Legal capacity refers to the contracting parties having the legal right to enter into a contract.
Legality of scope means that the objective of the contract must be legal and not violate public policy.
Finally, consideration is the “benefit” the contracting parties will get by obligating themselves to a legally binding contract.
In Consideration of Examples
Let’s look at a few examples of how the phrase in consideration of can be used in legal writing or contracts.
the Company issued 100,000 shares of common stock at a price of $1.00 per share to an accredited investor in consideration of a cash investment of $100,000
All such shares were issued to the selling shareholder in consideration of her cash subscriptions of $10 per share
The Company issued a Common Stock Purchase Warrant to acquire 1,000,000 shares of Common Stock in consideration of the Investor’s conversion of certain loans previously made to the Company
So there you have it folks!
What does “in consideration of” mean in a contract?
In a contract, “in consideration of” is typically written to refer to a payment, obligation, or duty given by one party to another.
For instance, in consideration of the non-competition obligation, the company signed a partnership agreement.
The “in consideration of” refers to a party’s undertaking not to compete leading the other party to sign a partnership agreement.
Keep in mind that in law, consideration can be anything of value or benefit of some kind.
Now that you know what in consideration of means and how it’s used, good luck with your contract!
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