What type of consideration involves a promise being traded for another promise?

The correct answer involves executory consideration, which refers to a situation where a promise is exchanged for another promise that will be fulfilled in the future. In this context, parties enter into a contract where they each agree to perform certain obligations or provide certain benefits at a later time. The core aspect of executory consideration is that both parties are bound by their promises, creating mutual obligations that are set to be executed at a future date.

For instance, in a contract where one party agrees to deliver goods in exchange for payment at a later date, both the delivery of the goods and the payment are promises that have not been fulfilled yet, making it executory consideration. This is essential in many contractual agreements as it ensures that both parties have something at stake and creates a binding effect that supports the contract's legitimacy.

In contrast, other types of consideration mentioned do not fit this definition. Executed consideration refers to situations where a promise has already been fulfilled, past consideration refers to something given or done before the contract was made and is not enforceable as part of a bargain, and conditional consideration involves promises contingent on certain events happening. These do not encapsulate the exchange of future promises that characterize executory consideration.