Bargained-for Exchange

Plain English

A bargained-for exchange is the core of any contract: both sides agree to give something and get something in return. It's not enough that both parties suffer a loss or both gain a benefit—the loss or gain must be the reason each party is entering the deal. If you promise to mow your neighbor's lawn and they promise to pay you $50, that's a bargained-for exchange. Each of you is motivated by what the other is offering. Without a bargained-for exchange, there's no valid consideration, and there's no enforceable contract.

Example

A student agrees to tutor a classmate in math for free, just to be nice. Later, the classmate offers to pay $20 per hour. If the student says, 'No, I'm doing it for free,' there's no bargained-for exchange for that $20—it's a gift. But if they agree that the $20 is the reason the student will continue tutoring, then there is a bargained-for exchange.

Used in a sentence

“The court determined that a true bargained-for exchange existed because both parties clearly intended to trade value.”

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