Does consideration need to be adequate?

• A. No, it need not be adequate
• B. Yes, it must be equal in value
• C. It must be greater in value
• D. It must be monetary

Answer: (A)

In contract formation, there must be consideration, but its value doesn’t have to be equal or substantial. The law uses the peppercorn idea: even a nominal amount can count as consideration, so long as there is a real bargain and something of value is exchanged for the promise.

So, no—the consideration does not need to be adequate. What matters is that something of value moves from one party in return for the promise. For example, a promise to transfer a car in exchange for £1 can form a binding contract, even though £1 is far from the car’s market value.

Of course, there are limits: the promise must be genuine consideration (not past, illusory, or lacking any bargained-for exchange). But adequacy—the equal or proportional value of the exchange—is generally not required.