Posted on January 8, 2010 at 12:48pm
A loan is a contract. In order for a contract to be legal, both parties must provide "consideration." This is a legal term which means both parties are putting something up as collateral, and if one party were to re-neg on the deal, the other party would thereby incur a liability, or loss of some real property, be it money, a house, a car, etc.
In a simple case, Johnny has a dollar and Susie wants a toy. She asks Johnny if she may borrow the dollar to purchase the toy. He agrees, adding… Continue