Consideration clause: Copy, customize, and use instantly
Introduction
A consideration clause explains the value exchanged between the parties in a contract, whether it's money, goods, services, or something else. It sets out the agreed compensation or responsibilities that each party is giving in return, making the contract legally binding. This clause helps ensure both parties are clear on what they’re committing to and what they’ll receive.
Below are consideration clause templates tailored to various scenarios. Copy the one you need, customize it, and add it to your contract.
Standard consideration clause
This clause confirms mutual consideration between the parties.
In consideration of the mutual promises and agreements set forth herein, the parties agree to perform their respective obligations as outlined in this agreement.
Monetary consideration clause
This clause explicitly identifies payment as the consideration.
In consideration of the payment of $[insert amount] by [Party A] to [Party B], [Party B] agrees to provide the services or goods described in this agreement.
Non-monetary consideration clause
This clause specifies non-monetary forms of consideration, such as services or property.
In consideration of [Party A]'s transfer of [insert description of goods/property], [Party B] agrees to perform the services detailed in this agreement.
Conditional consideration clause
This clause ties consideration to specific conditions or milestones.
The consideration for this agreement is conditional upon [insert condition, e.g., completion of a deliverable, regulatory approval]. Upon fulfillment of this condition, [Party A] will pay $[insert amount] to [Party B].
Reciprocal consideration clause
This clause highlights the exchange of obligations or promises.
In consideration of [Party A] providing [insert goods/services], [Party B] agrees to perform the obligations described in this agreement.
Upfront consideration clause
This clause requires consideration to be provided before obligations begin.
[Party A] agrees to pay $[insert amount] to [Party B] as consideration prior to the commencement of services or delivery of goods under this agreement.
Deferred consideration clause
This clause allows for consideration to be provided at a later time.
The consideration for this agreement, totaling $[insert amount], will be paid by [Party A] to [Party B] on or before [insert date].
Alternative consideration clause
This clause provides flexibility in the form of consideration.
The consideration for this agreement may be satisfied by [Party A] either through the payment of $[insert amount] or the provision of [insert description of goods/services] of equivalent value to [Party B].
Consideration with retention clause
This clause addresses partial withholding of consideration until specified criteria are met.
[Party A] will pay $[insert amount] to [Party B] as consideration for this agreement. A retention amount of $[insert amount] will be withheld until [insert criteria, e.g., project completion, verification of deliverables] is satisfied.
Adjusted consideration clause
This clause allows for adjustments to consideration based on predefined factors.
The consideration of $[insert amount] is subject to adjustment based on [insert factors, e.g., performance metrics, delivery schedule, market changes]. Any adjustment will be documented in writing and agreed upon by both parties.
Consideration with tax responsibility clause
This clause specifies how taxes are handled in the consideration.
The consideration of $[insert amount] excludes all applicable taxes. [Party B] is responsible for remitting any taxes arising from this transaction as required by law.
Contingent consideration clause
This clause ties consideration to specific future events or conditions.
The consideration for this agreement, totaling $[insert amount], is contingent upon the occurrence of [insert specific event or milestone]. If this event does not occur by [insert date], the agreement will be subject to renegotiation.
Proportional consideration clause
This clause provides for consideration based on performance or delivery.
The consideration for this agreement will be calculated proportionally, based on the quantity of [goods/services] delivered or milestones achieved, at a rate of $[insert rate] per [unit/milestone].
Nominal consideration clause
This clause recognizes nominal value in exchange for obligations.
In consideration of the nominal payment of $1 by [Party A] to [Party B], the parties agree to the terms and conditions set forth in this agreement.
Equity-based consideration clause
This clause uses equity as the form of consideration.
In consideration of [Party B]'s services, [Party A] agrees to transfer [insert number] shares of [insert company name] to [Party B], subject to the terms of this agreement.
Installment-based consideration clause
This clause sets consideration to be paid in installments.
The total consideration of $[insert amount] will be paid by [Party A] to [Party B] in equal installments of $[insert installment amount] on [insert schedule, e.g., monthly, quarterly] until the full amount is paid.
Advance consideration clause
This clause requires an advance payment.
As consideration for this agreement, [Party A] will provide an advance payment of $[insert amount] to [Party B]. The balance will be paid upon [insert condition, e.g., delivery, completion of services].
Performance-linked consideration clause
This clause links consideration to performance metrics.
The consideration for this agreement will be determined based on [insert metric, e.g., sales performance, project milestones], with [Party B] entitled to $[insert amount] per [insert metric unit].
Deferred equity consideration clause
This clause delays the transfer of equity as consideration.
As consideration for this agreement, [Party A] agrees to transfer [insert number] shares to [Party B] upon the successful completion of [insert specific obligation].
Market-based consideration clause
This clause ties consideration to market fluctuations.
The consideration for this agreement will be adjusted based on the market value of [insert asset/service] as of [insert date]. The final amount will be determined using [insert calculation method].
Consideration with escrow clause
This clause involves holding consideration in escrow.
The consideration of $[insert amount] will be deposited into an escrow account and released to [Party B] upon fulfillment of [insert condition, e.g., contractual obligations, delivery of services].
Incentive-based consideration clause
This clause includes bonuses or incentives tied to performance.
In addition to the base consideration of $[insert amount], [Party A] will pay [Party B] an incentive bonus of $[insert bonus amount] if [insert performance criteria] is achieved by [insert date].
Shared consideration clause
This clause specifies shared obligations in providing consideration.
The total consideration of $[insert amount] will be shared between [Party A] and [Party C] in the proportions of [insert percentage or amounts] for the benefit of [Party B].
Forfeitable consideration clause
This clause includes a provision for forfeiting consideration under specific circumstances.
The consideration of $[insert amount] will be forfeited by [Party B] if [insert condition, e.g., breach of agreement, failure to deliver obligations] occurs before [insert date].
Consideration with milestone payments clause
This clause ties payments to the achievement of specific milestones.
The total consideration of $[insert amount] will be paid by [Party A] to [Party B] in increments of $[insert amount] upon the successful completion of [insert milestone or deliverable].
Conditional refund consideration clause
This clause provides for a refund under certain conditions.
In consideration of $[insert amount] paid by [Party A] to [Party B], [Party B] agrees to refund [insert amount or percentage] if [insert condition, e.g., failure to deliver services, contract termination] occurs.
Partial consideration clause
This clause allows for partial payment based on partial fulfillment.
The consideration for this agreement will be $[insert total amount], of which $[insert partial amount] will be payable upon partial fulfillment of [insert obligation or milestone], with the remainder due upon full completion.
Royalty-based consideration clause
This clause bases consideration on royalty payments.
As consideration for this agreement, [Party A] agrees to pay [Party B] a royalty of [insert percentage] of net revenues generated from [insert product or service], payable on a [monthly/quarterly/annual] basis.
Contingency fund consideration clause
This clause provides for consideration through a contingency fund.
The total consideration of $[insert amount] will be allocated from a contingency fund maintained by [Party A], with disbursements made upon achieving [insert specific conditions].
Alternative payment consideration clause
This clause provides flexibility in the form of payment.
The consideration for this agreement may be satisfied through [insert alternatives, e.g., cash, services, or goods], as mutually agreed upon in writing by the parties.
Retrospective consideration clause
This clause applies consideration to past actions or contributions.
In consideration of [Party B]’s prior contributions or services rendered as of [insert date], [Party A] agrees to pay $[insert amount] under the terms of this agreement.
Consideration with setoff clause
This clause allows for deduction of debts from the consideration.
The consideration of $[insert amount] payable to [Party B] may be reduced by any amounts owed by [Party B] to [Party A] under this or any other agreement, as determined on the date of payment.
Indexed consideration clause
This clause ties consideration to an index or benchmark.
The consideration for this agreement will be adjusted annually based on changes to [insert index, e.g., Consumer Price Index], with the base amount set at $[insert amount] as of [insert base date].
Consideration tied to exclusive rights clause
This clause ties payment to exclusivity.
The consideration of $[insert amount] is provided in exchange for [Party B] granting [Party A] exclusive rights to [insert product/service/territory] for the duration of this agreement.
Revocable consideration clause
This clause allows the consideration to be revoked under specific conditions.
The consideration of $[insert amount] will remain payable to [Party B] unless [insert condition, e.g., breach of agreement, non-performance] occurs, in which case [Party A] reserves the right to revoke payment.
Joint obligation consideration clause
This clause defines shared responsibility for fulfilling consideration.
The consideration of $[insert amount] will be jointly provided by [Party A] and [Party C], with each party responsible for [insert specific share or proportion].
Consideration for future options clause
This clause allocates consideration for potential future agreements.
In addition to $[insert amount], [Party A] will provide an additional consideration of $[insert amount] for an option to extend the agreement under mutually agreed terms.
Performance escrow consideration clause
This clause ties consideration to escrow based on performance.
The consideration of $[insert amount] will be held in escrow until [Party B] has demonstrated completion of [insert obligation or milestone], at which point the funds will be released.
Mutual benefit consideration clause
This clause emphasizes mutual consideration between parties.
The consideration for this agreement includes $[insert amount] from [Party A] to [Party B], in exchange for [Party B] providing [insert benefit or service] to [Party A], ensuring mutual benefit.
Incremental consideration clause
This clause allows for incremental increases based on additional needs.
The initial consideration for this agreement is $[insert amount], with additional increments of $[insert amount] payable upon [insert conditions, e.g., additional services or products requested].
Consideration tied to specific milestones clause
This clause ties payment amounts to clearly defined milestones.
The consideration of $[insert total amount] will be payable in installments, with $[insert milestone amount] due upon completion of each milestone as outlined in [insert schedule or section].
Conditional refund consideration clause
This clause allows for a refund of consideration if specific conditions aren't met.
The consideration of $[insert amount] is subject to [Party A]’s satisfaction of [insert condition]. If this condition is not met, [Party B] agrees to refund the amount in full within [insert timeframe].
Consideration tied to resource allocation clause
This clause ties payment to the allocation of specific resources.
The consideration for this agreement includes $[insert amount] and the provision of [insert resources, e.g., personnel, equipment], to be allocated by [Party A] for the exclusive use of [Party B] during the term of the agreement.
Penalty-adjusted consideration clause
This clause adjusts consideration based on penalties for non-performance.
The consideration of $[insert amount] will be reduced by $[insert penalty amount] for each instance of non-performance or delay in meeting the obligations set forth in this agreement.
Anticipatory consideration clause
This clause sets consideration for services or goods yet to be delivered.
In consideration of future delivery of [insert goods or services], [Party A] agrees to pay $[insert amount] to [Party B], with payment to be made on or before [insert date].
Escalating consideration clause
This clause increases consideration over time.
The consideration for this agreement will begin at $[insert amount] for the first year and escalate by [insert percentage or amount] annually, reflecting the increasing scope of services provided.
Output-based consideration clause
This clause ties consideration to production or output levels.
The consideration of $[insert amount] will be calculated based on [insert metric, e.g., units produced, hours worked], with $[insert rate] payable per [insert unit or time].
Shared-risk consideration clause
This clause splits consideration based on shared risks and benefits.
The consideration for this agreement will include an upfront payment of $[insert amount] from [Party A] and a performance-based fee of $[insert amount] contingent upon [insert outcome].
Deferred consideration clause
This clause postpones payment until a future date.
The consideration of $[insert amount] will be deferred and payable on [insert date or condition, e.g., completion of project, receipt of funding].
Provisional consideration clause
This clause provides a temporary consideration until terms are finalized.
[Party A] agrees to pay $[insert amount] as provisional consideration for this agreement, subject to adjustment upon the finalization of [insert terms or conditions].
Consideration with periodic review clause
This clause allows the consideration to be reviewed and adjusted periodically.
The consideration of $[insert amount] will be subject to review and potential adjustment every [insert timeframe], based on [insert criteria, e.g., market conditions, performance metrics].
Consideration tied to exclusivity clause
This clause links consideration to exclusive rights granted under the agreement.
The consideration of $[insert amount] is provided in exchange for the exclusive right to [insert benefit or service] for the duration of this agreement.
Consideration with termination adjustment clause
This clause adjusts consideration in the event of early termination.
The consideration for this agreement will be prorated if terminated early, with $[insert refund or penalty amount] adjusted based on the proportion of work completed at the time of termination.
Upfront and residual consideration clause
This clause combines an upfront payment with residual payments.
The consideration for this agreement includes an upfront payment of $[insert amount] and residual payments of $[insert amount] per [insert interval, e.g., month, year], beginning [insert date].
Consideration based on intellectual property usage clause
This clause ties consideration to the use of intellectual property rights.
As consideration for the use of [insert intellectual property], [Party A] agrees to pay $[insert amount] to [Party B], with payments due on a [insert frequency] basis.
Performance-based consideration clause
This clause ties consideration directly to the achievement of performance targets.
The consideration of $[insert amount] will be payable upon [Party A] achieving the performance metrics outlined in [insert section or schedule], with payments prorated for partial performance.
Tiered consideration clause
This clause introduces payment tiers based on the level of service or goods provided.
The consideration for this agreement will be structured as follows: $[insert amount] for [insert tier 1 service/goods], $[insert amount] for [insert tier 2 service/goods], and $[insert amount] for [insert tier 3 service/goods], payable upon delivery of each respective tier.
Consideration tied to geographic scope clause
This clause adjusts consideration based on the geographical area covered by the agreement.
The consideration of $[insert amount] will be determined by the scope of geographic coverage provided by [Party A], with $[insert rate] allocated per [insert region or area].
Escrowed consideration clause
This clause places the consideration in escrow until conditions are met.
The consideration of $[insert amount] will be deposited in escrow and released to [Party B] upon the fulfillment of [insert condition or milestone], as verified by [insert verification method].
Consideration based on timeframes clause
This clause ties payment to completion within a specified timeframe.
The consideration of $[insert amount] will be payable in full only if the obligations under this agreement are completed by [insert date]. Delays beyond this date will result in a reduction of $[insert amount] per [insert time unit].
Partnership-focused consideration clause
This clause emphasizes mutual contribution to a partnership.
As consideration for this partnership, [Party A] will provide $[insert amount] and [insert non-monetary contributions, e.g., resources, services], while [Party B] will deliver [insert deliverables or services] as detailed in [insert section].
Success-fee consideration clause
This clause reserves payment for successful outcomes.
The consideration for this agreement will include a success fee of $[insert amount], payable upon the successful achievement of [insert milestone or result].
Time-and-materials consideration clause
This clause structures consideration around hourly rates and material costs.
The consideration for this agreement will be based on time and materials, with an hourly rate of $[insert amount] and reimbursement for materials as outlined in [insert schedule].
Consideration with penalties for overuse clause
This clause penalizes overuse of resources or services.
The consideration for this agreement includes $[insert amount] for standard use, with an additional $[insert penalty amount] charged for any use exceeding [insert threshold].
Floating consideration clause
This clause allows the consideration to fluctuate based on agreed variables.
The consideration of $[insert base amount] may be adjusted monthly based on [insert criteria, e.g., market rates, exchange rates], with adjustments capped at [insert percentage or amount].
Consideration tied to deliverable quality clause
This clause links payment to the quality of delivered goods or services.
The consideration of $[insert amount] will be payable upon verification that the delivered goods or services meet the quality standards outlined in [insert section].
Multi-party consideration clause
This clause divides consideration among multiple parties.
The consideration of $[insert total amount] will be divided as follows: $[insert amount] to [Party A], $[insert amount] to [Party B], and $[insert amount] to [Party C], based on their respective contributions.
Milestone-based refund clause
This clause provides for refunds if milestones are not met.
The consideration of $[insert amount] will be refundable if [Party A] fails to achieve the milestones specified in [insert section], with refunds processed within [insert timeframe].
Fixed-plus-variable consideration clause
This clause combines fixed and variable components.
The consideration for this agreement will include a fixed payment of $[insert amount] and a variable payment based on [insert criteria, e.g., sales, usage], calculated at $[insert rate] per [insert unit].
Early payment consideration clause
This clause provides a discount for early payment of the consideration.
The consideration of $[insert amount] will be reduced by [insert percentage or amount] if payment is received by [insert early payment deadline], as an incentive for prompt fulfillment.
Contingent consideration clause
This clause ties payment to the occurrence of a specific event.
The consideration of $[insert amount] will become payable only upon the occurrence of [insert specific event], as verified by [insert verification process].
Installment-based consideration clause
This clause allows for staggered payments.
The consideration will be paid in equal installments of $[insert amount], due on [insert specific dates], with the final payment contingent upon [insert condition].
Performance-bonus consideration clause
This clause includes a bonus for exceeding performance metrics.
In addition to the base consideration of $[insert amount], a bonus of $[insert bonus amount] will be payable if [Party A] exceeds the performance metrics outlined in [insert section].
Consideration adjustment for scope changes clause
This clause adjusts consideration based on modifications to the agreement’s scope.
The consideration of $[insert amount] may be adjusted proportionally if the scope of work described in [insert section] is modified by mutual agreement.
Consideration with inflation adjustment clause
This clause ensures payments are adjusted for inflation.
The consideration of $[insert amount] will be adjusted annually to reflect changes in the Consumer Price Index (CPI) or other agreed inflation measure, with adjustments capped at [insert percentage].
Consideration offset clause
This clause permits deductions from the consideration under specific circumstances.
The consideration payable to [Party B] may be offset by amounts owed by [Party B] to [Party A] under this or any other agreement, subject to prior notice and reconciliation.
Consideration tied to regulatory approval clause
This clause makes payment conditional on obtaining regulatory approvals.
The consideration of $[insert amount] will become due only upon receipt of all necessary regulatory approvals required for the execution of this agreement.
Tiered milestone consideration clause
This clause ties payments to the completion of multiple milestones.
The consideration will be payable as follows: $[insert amount] upon achieving milestone 1, $[insert amount] upon achieving milestone 2, and $[insert amount] upon achieving milestone 3, as detailed in [insert section].
Holdback consideration clause
This clause withholds a portion of the payment until final verification.
A holdback amount of $[insert amount] will be retained from the total consideration and released upon final verification of all deliverables in accordance with [insert section].
Consideration tied to exclusivity clause
This clause links payment to the exclusivity of the agreement.
The consideration of $[insert amount] reflects the exclusive nature of this agreement, and any breach of exclusivity will result in adjustments to the consideration as outlined in [insert section].
Consideration escalation clause
This clause allows for periodic increases in the consideration amount.
The consideration of $[insert initial amount] will increase by [insert percentage or amount] every [insert time period], subject to a maximum cap of $[insert amount].
Consideration with currency adjustment clause
This clause addresses exchange rate fluctuations in cross-border agreements.
The consideration of $[insert amount] will be paid in [insert currency] and adjusted for exchange rate fluctuations using the rate published by [insert financial institution] on the payment due date.
Consideration with setoff rights clause
This clause allows for deductions if certain conditions are unmet.
The consideration of $[insert amount] is subject to setoff rights, whereby [Party A] may deduct amounts related to [insert conditions or deficiencies], provided notice is given to [Party B].
Sliding scale consideration clause
This clause ties the consideration amount to performance thresholds.
The consideration payable under this agreement will range between $[minimum amount] and $[maximum amount], depending on the achievement of performance thresholds as outlined in [insert section].
Deferred consideration clause
This clause allows a portion of the consideration to be paid at a later date.
A portion of the consideration, amounting to $[insert amount], will be deferred and payable upon the occurrence of [insert condition or time frame], as agreed by the parties.
Consideration contingent on transfer clause
This clause ties payment to the successful transfer of assets or rights.
The consideration of $[insert amount] is contingent upon the successful transfer of [specific assets/rights] to [Party A] by [insert date].
Royalty-based consideration clause
This clause bases payment on revenue or usage metrics.
The consideration will include a royalty of [insert percentage]% on net revenues derived from [specific products/services] during the term of the agreement, subject to a minimum payment of $[insert amount].
Consideration linked to exclusive access clause
This clause ties payment to exclusive access rights.
The consideration of $[insert amount] reflects the value of the exclusive access rights granted to [Party A] under this agreement, which will remain in effect for [insert duration].
Consideration adjustment for underperformance clause
This clause reduces payment if performance expectations are not met.
The consideration of $[insert amount] will be subject to a reduction of [insert percentage or amount] if [Party B] fails to meet the performance standards set forth in [insert section].
Payment acceleration for early completion clause
This clause incentivizes early delivery or project completion.
The full consideration of $[insert amount] will be payable immediately upon early completion of the project, provided all deliverables meet the agreed specifications.
Consideration structured as equity clause
This clause defines payment in terms of equity.
The consideration for services rendered will be structured as [insert percentage]% equity ownership in [Party A/Party B], as outlined in the equity transfer terms in [insert section].
Consideration contingent on third-party approval clause
This clause requires a third party's approval before payment.
The consideration of $[insert amount] will become payable only upon written approval from [specific third party], confirming compliance with all relevant terms and conditions.
Consideration cap for specified expenses clause
This clause limits consideration for reimbursable expenses.
The consideration of $[insert amount] includes reimbursement of expenses up to a maximum cap of $[insert cap amount], as detailed in [insert section].
Conditional escalation of consideration clause
This clause increases payment under specific conditions.
The consideration of $[insert amount] will escalate by [insert percentage or amount] upon the occurrence of [specific event or condition], as determined by the parties in writing.
Non-refundable consideration clause
This clause specifies that payments are final and non-refundable.
The consideration of $[insert amount], once paid, will be deemed non-refundable under all circumstances, unless expressly agreed otherwise in writing by both parties.
Consideration tied to bundled services clause
This clause links payment to a package of services.
The consideration of $[insert amount] represents payment for the bundled services outlined in [insert section], and adjustments will not be made for partial delivery or use of individual services.
Consideration tied to patent assignment clause
This clause links payment to the transfer of intellectual property rights.
The consideration of $[insert amount] will be payable upon the assignment and successful registration of the patents listed in [insert section] in the name of [Party A].
Time-barred consideration clause
This clause places a time limit on claiming payment.
The consideration of $[insert amount] must be claimed by [insert deadline], after which [Party A] will have no obligation to make payment under this agreement.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.