Basic Arizona Contract Law - What Is "Consideration" & How Much Is Required

One of the essential requirments of a contract is the existence of "consideration," which is the value bargained for by the parties. For example, if you agree to sell me a candy bar for $1.00 - the $1.00 represents the consideration given for the candy bar.

Although every case turns on its individual facts, Arizona courts are generally hesitant to reform or refuse to enforce a contract because one of the parties made a bad deal. Most of the decisions addressing the adequacy of consideration hold that there is no legal basis to inquire into an individual's reasons for giving another party what may now seem to be a great deal.

Consideration, nevertheless, remains a contractual requirement, and although adequacy may not be examined, consideration must meet other pertinent requirements. One of these is that the consideration given, whether it be money, services, or some other measure of value, must be given in exchange for the transaction in question. In other words, past consideration is not sufficient.

One area where past consideration arises is in the field of employment law. In Arizona, employment contracts must be written to be enforceable, so the consideration for some new requirement or responsibility can usually simply be met by continued employment. For instance, if an employee who has worked for a company for a number of years is required to sign a non-compete agreement as a condition of continued employment, the consideration requirement will likely be met. That may not be the case, however, if the employer presents such an agreement but does not require that it be signed as a condition of continued employment.

In the case where a written employment contract does exist, an offer of additional pay to provide services already required under the contract will not be enforceable absent some consideration, such as extra responsibilities or an extension of the contract.

If you're involved in a contract dispute the question of whether valid consideration was exchanged may be an area to explore in the prosecution or defense of any claims. Because the evaluation of that question can be complicated and may turn on the interpretation of prior cases, you should discuss the matter with an experienced contract lawyer.