As every simple contract must be supported by a consideration, it necessarily follows that negotiable instruments must as between the parties be so supported. But if the instrument is negotiated before maturity, and for value to a holder without notice of the want of consideration, the defense cannot be made against him.
Thus, A, expressing his purpose to make B a gift gives B his promissory note, for which B gives no return. This instrument cannot be enforced by B, but if B sells it to C, in due course, C can enforce it.
A pre-existing debt may constitute consideration for negotiable paper.
In the absence of proof to the contrary, a consideration In negotiable instruments will be presumed. No recital of consideration Is necessary.
It is a peculiar characteristic of negotiable instruments that a consideration will be presumed until the contrary is shown. It is not necessary to recite
27. Uniform Negotiable Instruments Act, Sees. 24-29 the consideration, nor to recite that there has been a consideration. The words "value received," or their equivalent are not necessary.
Whether consideration Is adequate or inadequate will not in the absence of fraud be inquired into, except In cases where the consideration was money loaned and the amount promised in return is enough greater to render the transaction usurious.
In this, as in other forms of contract, the adequacy or inadequacy of the consideration is in itself of no importance and will not be inquired into. If there is an allegation of fraud and other evidence to prove it besides the mere inadequacy, the Court may in a proper case take into account the inadequacy of the consideration.
If one loans money and gives his note in return for an amount enough larger to make the transaction usurious, in that sense the inadequacy of the consideration will be gone into. The effect of taking usury varies in the different states.