I've seen in some contracts where if the rights to something are sold, the seller retains a license for some nominal fee, such as $1. Why is this? I think it's to show that "due consideration was given" but I'm not sure.

Here is one example, but it appears to be for some kind of receipt instead of a license. (Copied from Free legal form: Software Purchase Agreement)

6.1. User acknowledges receipt of the sum of $1 furnished by Inserv as the mutually agreed upon purchase price as good and sufficient consideration of User entering into this Agreement and delivering the Subject Programs under Section 3, in addition to the additional consideration described below.

For contracts that are $1000, why do they bother having certain parts for less than $5?


The concept of consideration is not obvious, but it basically means that a contract has to have two sides before it is enforceable.

Clearly nobody who has not seen the specific contract can be certain, but it might be that the lawyers wanted to cover the possibility that "User" decides to quit the contract without delivering the programs and without receiving any of the scheduled payments. If no payment has been made, no consideration has been received, so you (probably/possibly) can't sue for breach of contract. On the other hand, with this clause the company can argue that User received consideration (of $1) for signing the contract, which brings them within the reach of the law.

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