Nominal Consideration

In one sentence

Something of minimal or token value exchanged to make a contract legally binding.

Plain English

Nominal consideration is when parties exchange something that has little or no real economic value, but the law treats it as valid consideration to form a binding contract. The idea is that the law doesn't measure whether the exchange is fair or equal—only that something of legal value passes between the parties. For example, paying $1 for a house might be nominal consideration, but it can still make the contract enforceable. The amount or value doesn't matter as long as there's something.

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Example

A grandmother wants to give her house to her granddaughter but wants it to be a binding legal contract. They agree that the granddaughter will pay $1 in exchange for the house. That $1 is nominal consideration—it has minimal real value but is enough to make the gift enforceable as a contract.

Used in a sentence

“The court upheld the contract even though the consideration was nominal, as long as something of legal value was exchanged.”

Related terms

Contract

A legally binding agreement between two or more parties to do or not do something.

Legal Value

Something of worth in the eyes of the law that can support a binding contract.

Benefit

Something of value a party receives or gains from a contract.

Detriment

Something a party gives up or agrees to do as part of a contract exchange.

Consideration

Something of value exchanged by each party to make a contract binding.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

Offeror

The person who makes an offer to enter into a contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.