Nature of the Consideration

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Consideration is property or services exchanged for stock. While cash is commonly used to purchase stock, a stock purchaser may pay with something other than cash, such as property, whether tangible or intangible, or services or labor performed for the corporation. In most states, promissory notes and contracts for future services are not lawful forms of consideration. The caseUnited Steel Industries, Inc. v. Manhart, (see Consideration in Exchange for Stock ), illustrates the problems that can arise when services or promises of future delivery are intended as payment for stock.