Final answer:
The requirement of an intentional exchange of something of value in a contract is known as consideration. It is essential for the contract's legality, ensuring each party receives something in return, which underpins the private market's efficiency and the enforcement of contracts.
Step-by-step explanation:
The requirement that each party to a contract must intentionally xchanege something of value as an inducement to the other party to make a return exchange is known as consideration. Consideration is a core component of a valid contract and reflects the idea that for an agreement to be legally binding, there must be a mutual exchange of value. This could be in the form of money, services, or goods. For example, in a cell phone contract, the company provides a cell phone and service, while the customer provides payment, which is the consideration from both sides that makes the contract valid.
Without a legal system that enforces contracts and the principle of consideration, people would be hesitant to enter into agreements for fear of non-payment, making it difficult to run businesses and stifling economic growth. Private markets rely on the efficiency of voluntary exchanges and the enforcement of contracts to function effectively.