What does "consideration" refer to in the context of contracts?

In the context of contracts, "consideration" refers to the tangible value exchanged between parties involved in the agreement. It is a fundamental component of a valid contract, as it represents what each party stands to gain or lose as a result of their agreement. Consideration can take various forms, including money, services, goods, or even a promise to refrain from doing something. This exchange is essential because it demonstrates that both parties have a stake in the contract, which contributes to its enforceability under contract law.

A mutual agreement alone does not constitute consideration; rather, it must involve some form of value that is exchanged. Legal representation is related to the parties involved but does not reflect the notion of consideration in a contract. Similarly, administrative costs pertain to the mechanics of enforcing a contract rather than the core principle of what each party provides in the agreement. Thus, understanding consideration as the actual value exchanged clarifies its critical role in contractual relationships.