What is Consideration?

Consideration does not have to be money. Anything that is of value can be consideration. Think of consideration as a "benefit" that one party will give the other. This is a simple example of an exchange of benefits:

The University gives the Author certain resources. The Author gives the University certain rights to use and exploit the work. Both parties agree to share in any royalties that result from commercialization.

Notice that the consideration you will state in this paragraph is related to the rights granted in Section 1.

Here's how this simple example would look in contract language:

1. As consideration for the grant of the rights set forth in Section 1, the University will contribute the following resources to the creation of the Work:

   [List the University's contribution, including materials, hardware, software, technical assistance, other assistance, videotaping, programming, funding, teaching load credit...]

2. The parties also shall share in any revenues from commercialization of the work as follows:

   University shall first recover the value of its contribution in the amount of $___ (____), then the parties shall share [% split] in any royalties received.

The following factors should help the parties determine mutually agreeable ways to share responsibility for creation of the work (described in this Section) and rights to use and exploit it (described in the Rights Granted Section). The parties should focus on what they each want to do with the results of the project, including whether either wishes to commercialize it, what resources they have contributed, and what they consider a "benefit" that could be shared with or given to the other:

• Whose idea was it to create the work?

  Was the project initiated by a faculty member or members or by the University (an administrator)? This fact can affect the scope of the rights granted in Section 1 for which consideration is given in this Section.

• What are each participant's goals or objectives for the project?

  Classroom use; departmental use; college or university use; System-wide use; commercial use? This fact also affects the grant of rights in Section 1.

• What have the parties contributed or will they contribute towards the completion of the project?

  Contributions of time, money and effort up to some level or certain types of contributions may be considered "ordinary" or "normal." For example, fixed costs such as salary will usually be spent whether or not the parties undertake a particular project. Expenditures above or beyond normal or fixed costs may be "substantial," warranting offset or recovery. Note also that each party's contribution should be taken into consideration in the grant of rights in Section 1.

• What do the parties consider a "benefit" that could be shared?
  
  
  • Computing resources
  • Multimedia technical support
  • Training
  • Teaching load credit
  • Use of the work (for the University, this would be reflected in Rights Granted in Section 1)
  • Royalties

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Last updated: March 13, 2007