A promise of future money in a contract is an example of what?

In contract law, consideration refers to something of value that is exchanged between parties to form a binding agreement. When one party promises to pay money in the future, that promise serves as the consideration for the other party's commitment, creating a mutual obligation. This future payment is a vital component because it demonstrates that both parties are engaging in a transaction that entails rights and responsibilities.

Understanding consideration is essential because it distinguishes enforceable contracts from mere promises. Without consideration, even if there is an offer and acceptance, a contract may be deemed void or unenforceable. The promise of future money is, therefore, a clear example of consideration, as it is the motivation or incentive for the other party to fulfill their part of the agreement. This principle reinforces the idea that both parties must gain something of value for the contract to be valid.