Consideration is some thing of value promised by one party to another while entering into a contract. The first and most important thing to be considered while making a contract is that the consideration must be passed on with the willingness of the promisor. Consideration should contain payment of money, some act, abstinence or promise. For a consideration to be valid there must be a promise from both sides. This means that there must be a promise by one party against the promise of the other party. If a person agrees to sell his house to another person for $150,000 and the other person is willing to pay for the house there is consideration from both the parties. Consideration can be in the form of money, services, physical object or even actions or abstinence from an action.
An assignment of a right is a materialization of the assignor’s intention to transfer his/her right to assignee.[i] By assignment, an assignor’s right to performance is extinguished in whole or in part and the assignee acquires a right to such performance.[ii]
Instances of valid considerations other than payment of money are given below:
- A promise which discharges an assignor from the claims that an assignee had against the assignor;
- A title discharging assignee’s claims against an assignor for selling a mortgage without clearing the earlier mortgage; or
- A collateral deposit with a surety satisfying a contractor’s obligation under an indemnity agreement.
In short, consideration must have a value that can be objectively determined.
[i] Restat 2d of Contracts, § 317(1)
[ii] Bank of Am., N.A., & S.A. v. Moyer, 18 V.I. 220 (V.I. Terr. Ct. 1982)