Lesson: Adequate Consideration

In this lesson, Nick Palazzolo, CPA, demystifies the concept of adequate consideration in contract formation, illustrating the necessity of both parties offering something of legal value to forge an enforceable agreement. Delving into the intricacies of consideration, he clarifies why a promise of something in exchange for nothing, also known as a fortuitous promise, lacks enforceability in the eyes of the law. Through examples, Nick walks through various forms of consideration, such as performing an act or refraining from an action, emphasizing that the exchanged items or promises need not be monetary or equal in value. He further explains the principle that pre-existing legal duties fail to qualify as valid consideration for a new contract and unpacks the legal stance on gifts and their unenforceability due to the absence of consideration. Join Nick as he breaks down these key points, ensuring a clear understanding of what constitutes adequate consideration in a contract.