What does "nominal consideration" refer to in a leasing context?

In a leasing context, "nominal consideration" refers to minimal fees associated with renewing or retaining assets. This concept is often utilized in lease agreements where the renewal or retention of the asset involves very little financial obligation. It indicates that the transaction costs are minimal and may not reflect a significant monetary exchange, often serving more as a formality to maintain the lease contract.

This term typically applies when a lease is renewed at a cost that is significantly lower than market rates, essentially allowing the lessee to continue using the asset with little financial burden. It emphasizes the low level of commitment required in terms of financial resources at the time of lease renewal, distinguishing it from situations that might involve high costs or significant penalties.