Understanding Contractual Consideration
A fundamental principle in contract law is consideration—the exchange of value between parties that validates a contract. As established in Currie v Misa (1875), consideration must hold:
- Real economic value
- Legal value
Without these, the contract may be deemed unenforceable.
Bitcoin in Construction Contracts
Construction contracts typically specify payment in fiat currencies (e.g., USD, EUR). For example, FIDIC Red Book 2017 mandates payment in "the currency or currencies named in the Contract Data."
However, with rising interest in cryptocurrencies like Bitcoin (BTC), questions arise: Can Bitcoin fulfill contractual consideration?
Assessing Bitcoin’s Validity as Consideration
1. Real Economic Value
- Bitcoin’s value derives from market consensus. In March 2024, 1 BTC traded at ~$70,000, reflecting buyer-seller agreement.
- Recognized by the World Economic Forum (2022) as a potential "new rail" for payments and asset diversification.
- Volatility concerns: Price fluctuations (e.g., -80% in 2018) raise reliability issues for long-term contracts.
👉 Learn how Bitcoin volatility impacts contract stability
2. Legal Value
- Legal tender status: Only El Salvador (2021) and the Central African Republic (2022) recognize Bitcoin as official currency.
- Most jurisdictions permit Bitcoin transactions but don’t classify it as legal tender.
- UAE example: Courts invalidated a Bitcoin contract in 2023, citing non-compliance with Sharia/legal criteria—though left room for future regulation.
Key Takeaways
- Economic viability: Bitcoin’s value is market-driven but unstable.
- Legal uncertainty: Few countries accept it as tender; most treat it as unregulated.
- Recommendation: Avoid Bitcoin payments in contracts until clearer regulations emerge.
FAQ
Q: Is Bitcoin legally recognized for contracts globally?
A: No. Only two countries classify Bitcoin as legal tender; others lack definitive frameworks.
Q: How does Bitcoin’s volatility affect contracts?
A: Sudden price shifts risk undermining the agreed consideration’s value, potentially breaching contract fairness.
Q: Can parties voluntarily agree to Bitcoin payments?
A: Yes, but enforceability depends on governing law—consult legal experts to mitigate risks.
👉 Explore crypto-friendly contract solutions
Author: Hadi Lakkis
Managing Consultant, HKA Abu Dhabi | Civil Engineer | MBA, FCIArb, LLM Candidate
Disclaimer: Views expressed are the author’s alone. Not legal/financial advice. Copyright © 2025 HKA Global Ltd.
### SEO Keywords
1. Bitcoin contracts
2. Legal tender cryptocurrency
3. Contractual consideration
4. Construction payments
5. Cryptocurrency volatility
6. FIDIC Red Book
7. UAE crypto laws
8. El Salvador Bitcoin Law