Consideration in contract law is the value or benefit given by each party in exchange for the other party’s value or benefit—such as money in exchange for products or services, or mutual promises exchanged.

Consideration is often referred to as the bargained-for exchange in which one consideration is exchanged for another consideration.

A mere promise to do or refrain from doing something that lacks consideration in the form of a value or benefit provided by the other party (a return promise) is not a contract and is generally not enforceable. One exception to this rule may be if one party promises to do or refrain from doing something, and the second party relies on that promise to its detriment (by spending money, for example), the detrimental reliance may create an enforceable contract.

And if the consideration for a contract is so insubstantial that it is worthless, the contract is said to be illusory and is not enforceable.

The existence of consideration is what distinguishes an enforceable contract from a promise to make a gift. Because a gift is a voluntary, gratuitous transfer of property from one person to another—without something of value promised in return—the failure to fulfill a promise to make a gift is not enforceable as a breach of contract, as there is no consideration for the promise to make the gift.

In Montana, as in other states, consideration is a fundamental component of a legally binding contract. Consideration refers to something of value that is exchanged between parties when entering into a contract. It can be money, services, goods, or a promise to do or not to do something. The consideration must be something that the parties have bargained for and agreed upon. Without consideration, a contract may be deemed unenforceable because it lacks one of the essential elements required to form a valid contract. Montana law recognizes the concept of detrimental reliance, also known as promissory estoppel, where a party may be held to a promise if the other party has relied on that promise to their detriment. However, this is an exception rather than the rule. Contracts with consideration that is deemed illusory or so insubstantial that it has no value are not enforceable in Montana. This is because there is no true exchange of value between the parties. Lastly, promises to make a gift are not enforceable as contracts in Montana because they lack consideration; a gift is a voluntary transfer without the expectation of receiving something in return.