Define "consideration" in the context of contract law.

In contract law, "consideration" refers to something of value that is exchanged between the parties involved in a contract. It is a fundamental element that differentiates agreements that are enforceable by law from those that are not. In essence, consideration is what each party offers to the other as part of the bargaining process; it could take the form of money, services, goods, or a promise to refrain from an action.

For a contract to be valid and legally binding, there needs to be a mutual exchange of consideration, meaning that each party must provide something of value that the other party deems significant. This reciprocal exchange is what helps to ensure that both parties have a stake in the agreement. If one party simply promises something without receiving anything in return, such as a gift, that promise typically doesn't meet the legal standard required for enforceability.

Understanding this concept is crucial for examining the contractual obligations and rights that arise in business interactions, as consideration forms the basis for legal contracts and helps protect the interests of all parties involved.