Also known as: good consideration · valuable consideration
Written by attorneys — see sources below.
Something of value such as an act, a forbearance, or a return promise bargained for and received by a promisor from a promisee. The exchange must involve a measurable economic detriment or benefit that the law recognizes as sufficient to support enforcement of a promise.
Maria accused Keller & Ross of mishandling her case and threatened suit. The managing partner replied by offering a full refund plus payment of new counsel fees if Maria agreed not to file suit. Maria later sought to introduce the email at trial to prove malpractice. The court excluded the email because the refund and fee payment constituted valuable consideration offered to compromise a disputed claim.
Allied Development conveyed an office building to Stephen by unrecorded deed in settlement of a zoning suit. State A later purchased the same building from Allied for 2.4 million dollars cash and recorded first. State A officials had reviewed public minutes describing the prior pledge but dismissed them as political. Because State A paid valuable consideration yet had inquiry notice of Stephen's interest, it failed to qualify as a bona fide purchaser and Stephen prevailed.
Gavin Grant accepted a bill of exchange from a seller in payment for land whose title later proved defective. Gordon Gray, a citizen of another state, acquired the bill before maturity in exchange for canceling a prior debt. Gray sued on the bill. Because Gray took the instrument as a bona fide holder for valuable consideration without notice of the underlying fraud, he recovered despite the land-title defects.
Swift, a citizen of Maine, instituted an action in the circuit court of New York against Tyson on a bill of exchange that Tyson had accepted in New York. The acceptance and indorsement of the bill were admitted at trial. Swift had taken the bill before it became due in payment of a promissory note due to him from Norton & Keith. He was a bona fide holder without notice who believed the bill was justly due. Tyson had accepted the bill as part consideration for lands sold by Norton & Keith, to which those parties had no title and which were of little or no value. The defendant offered to prove that the acceptance had been given under circumstances involving misrepresentation of the quality of the lands and imposition by fraud on the part of the drawer and co-owners. The circuit judges divided on the question of whether, under these facts, the defendant had available to him the same defense against Swift as he would have had against the original parties to the bill. This division resulted in certification of the question to the Supreme Court for resolution.
View caseGareth Glover's uncle promised him 5,000 dollars if he refrained from drinking and gambling until age twenty-one. Gareth fully performed the requested forbearance. When the uncle's estate refused payment, Gareth sued. The court enforced the promise because Gareth's voluntary restriction of his lawful freedom constituted valuable consideration supporting the contract.
On March 20, 1869, William E. Story agreed to and with William E. Story, 2d, that if he would refrain from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he should become 21 years of age then he would at that time pay him the sum of $5,000 for such refraining, to which the nephew agreed. The trial court found that the nephew in all things fully performed his part of said agreement. On the 31st day of January, the nephew wrote to his uncle claiming that according to agreement there was due him $5,000, having lived up to the contract to the letter in every sense of the word. A few days later, on February sixth, the uncle replied. He had the money in the bank the day the nephew was 21 years old that he intended for him, and the nephew should have the money as promised. He did not intend to interfere with this money in any way until he thought the nephew was capable of taking care of it, with the money on interest. The nephew thereafter consented that said money should remain with the uncle in accordance with the terms and conditions of said letter. Afterwards, on the first day of March, 1877, with the knowledge and consent of his uncle, the nephew duly sold, transferred and assigned all his right, title and interest in and to said sum of $5,000 to his wife Libbie H. Story, who thereafter duly sold, transferred and assigned the same to the plaintiff in this action. The Special Term rendered judgment for the plaintiff. The General Term reversed, and the plaintiff appealed to the Court of Appeals.
View caseGino Giordano conveyed a large tract to Fletcher for valuable consideration paid in cash. Years later the state legislature attempted to rescind the grant on grounds of fraud in the original sale. The Supreme Court held the conveyance valid and protected because Fletcher had given valuable consideration and the contract could not be impaired by subsequent legislative action.
The suit was instituted on several covenants contained in a deed made by John Peck, the defendant in error, conveying to Robert Fletcher, the plaintiff in error, certain lands which were part of a large purchase made by James Gunn and others, in the year 1795, from the state of Georgia. The contract for which was made in the form of a bill passed by the legislature of that state. The first count set forth a breach in the covenant that the legislature of the state of Georgia at the time of passing the act of sale had good right to sell and dispose of the same in manner pointed out by the said act. The second count assigned as a breach that the original grantees had promised and assured members of the legislature an interest in the lands if they voted for the bill. The third count alleged that a subsequent legislature passed an act annulling and rescinding the law under which the conveyance to the original grantees was made. The fourth count assigned as a breach that the right to the soil was in the United States and not in Georgia. In the circuit court there were demurrers to three pleas and a special verdict found on an issue joined on the fourth plea. The pleas were all sustained and judgment was rendered for the defendant. After the opinion of the court was delivered on the initial demurrers, the parties agreed to amend the pleadings and the cause was continued for further consideration. The special verdict found the grant of Carolina by Charles the second to the Earl of Clarendon and others. It found the subsequent erection of Georgia as a colony. It found the surrender of the grantees to the crown in 1752. It found the appointment of governors with commissions describing the boundaries. It found the 1763 proclamation creating new colonies and reserving lands on the western waters for the use of the Indians. It found the 1787 convention between South Carolina and Georgia settling their boundary line. The verdict described the situation of the lands in such manner that their lying within the limits of Georgia as defined in the proclamation of 1763, in the treaty of peace, and in the convention between that state and South Carolina has not been questioned. The case comes before this court on the amended pleadings consisting of sundry demurrers and the special verdict.
View caseGiselle Guerrero accepted an at-will position with Glacier Energy after the company promised continued employment in exchange for her agreement to arbitrate disputes. When Glacier later terminated her, Giselle claimed the arbitration clause lacked consideration. The court upheld the clause because Glacier's promise of employment and Giselle's promise to work supplied mutual valuable consideration sufficient to support the agreement.
Interactive Data Corporation hired John Foley in June 1976 as an assistant product manager at a starting salary of $18,500. As a condition of employment Foley signed a confidential and proprietary information agreement. The company's president told Foley that if he performed his job well he would have a long and rewarding employment with the firm. Over the next six years and nine months Foley received steady salary increases, promotions, bonuses, awards, and superior performance evaluations, rising to branch manager of the Los Angeles office with an annual salary of $56,164 plus a merit bonus. In January 1983 Foley learned that his new supervisor, Robert Kuhne, was under investigation by the FBI for embezzlement from his former employer, Bank of America. Foley reported the information to Vice President Richard Earnest because he was worried about working for Kuhne in a supervisory position. Earnest told Foley not to discuss rumors and to forget what he had heard. In early March 1983 Kuhne informed Foley that the company had decided to replace him for performance reasons and offered a transfer to another division. Foley was later told he could continue as branch manager if he agreed to a performance plan, but when Kuhne met with him the next day Kuhne instead gave Foley the choice of resigning or being fired. Foley was discharged on March 13, 1983. Foley filed suit against Interactive Data Corporation alleging three causes of action: tortious discharge in violation of public policy, breach of an implied-in-fact contract to terminate only for good cause, and tortious breach of the implied covenant of good faith and fair dealing. The superior court sustained the company's demurrer without leave to amend and dismissed the action. The Court of Appeal affirmed the judgment. The Supreme Court granted review.
View caseYes. When a party offers money or other measurable value conditioned on the other side dropping a claim, the offer supplies valuable consideration within the meaning of the compromise rule. Courts therefore exclude evidence of the offer when it is introduced to prove liability or damages.
The purchaser must show an exchange of something of measurable economic value, such as cash or other property, given in good faith without actual or inquiry notice of a prior unrecorded interest. Payment alone is insufficient if the purchaser had reason to investigate further.
Yes. When a party voluntarily restricts lawful freedom of action, such as refraining from drinking or gambling, in exchange for a promise, the forbearance supplies valuable consideration even if the promisor receives no direct benefit.
…sale. The bill accepted had been received bona fide and before it was due. A bona fide holder of a negotiable instrument for a valuable consideration, without any notice of facts which implicate its validity as between the antecedent parties, who takes it under an indorsement made before it becomes due, holds title unaffected by those…