Glossary

Consideration

Consideration is what each side gives to make a contract binding — usually the price paid in return for goods, services or a business. No consideration, no contract.

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Value exchangedMakes a contract binding

Usually the priceLegal essential

Definition

Consideration is the value each party provides under a contract — commonly money for goods, services or shares. English law generally requires consideration for a contract to be enforceable.

In plain terms

It is the "what each side gets" in a deal. In a business sale, the consideration is the total price, which may combine cash, shares and deferred consideration.

Why it matters for your company

How consideration is structured (cash, shares, deferred, earn-out) affects tax, funding and risk. Take advice before agreeing the shape of a deal. See deferred consideration.