Contracts
Consideration
The thing of value each party gives to make a contract binding
It need not be money and need not be equal in value on both sides. In a purchase contract the consideration is usually the exchange of promises: the buyer promises to pay, the seller promises to convey.
How the exam asks about it
Earnest money is not the consideration for a purchase contract, and the exam relies on people assuming it is. The deposit is evidence of good faith; the promises are the consideration.
Related terms
Sitting the license exam? Find out what you actually know.
Free practice questions built to the published national content outline, with an explanation after every answer. No account, no paywall.
Independent exam preparation. Real Estate Exam Bank is not a state-approved pre-licensing course and completing anything here does not satisfy any state education requirement. Not affiliated with, endorsed by, or authorized by any state real estate commission, Pearson VUE, or PSI. Practice questions here are original study material, not the official exam.