Legal Definitions - nominal consideration

Definition: Nominal consideration is a type of consideration that is so insignificant that it bears no relationship to the value of what is being exchanged. It can be a small amount of money or a trivial act. However, it can still be considered valid in a contract since courts do not usually examine the adequacy of consideration.

Example: An example of nominal consideration is when a person sells a piece of real estate worth $100,000 for $10. Even though the amount paid is significantly less than the value of the property, the transaction can still be considered valid since the parties have agreed to the terms.

Explanation: In this example, the nominal consideration is the $10 paid for the real estate. Even though the amount paid is significantly less than the value of the property, the transaction can still be considered valid since the parties have agreed to the terms. The court does not usually examine the adequacy of consideration, but it may inquire into issues such as fraud and duress.