This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
"The consideration required to support a promise has been defined as consisting of any damage, or any suspension, or forbearance of his right or any possibility of a loss occasioned to the plaintiff by the promise of another, although no actual benefit accrues to the party undertaking."9
Sec. 515. "Benefit" and "detriment." The meaning of "benefit" and "detriment" in this connection needs explanation. While correct if properly understood, it is liable to misconstruction. Neither of these terms has its popular meaning in this statement. "Benefit" does not refer to any eventual pecuniary gain arising out of the transaction, nor "detriment" to any eventual pecuniary loss.1 It is not possible to wait till the transaction is concluded and the books balanced, to see whether a consideration existed originally. "Benefit" as used in this rule means that the promisor has, in return for his promise, acquired some legal right to which he would not otherwise have been entitled. "Detriment" means that the promisee has. in return for the promise forborne some legal right constitutes a sufficient consideration to support a contract." Schlatter v. Trie-bel, 284 111. 412, 120 N. E. 289 [citing Buchanan v. International Bank, 78 111. 500; People v. Commercial Life Ins. Co., 247 III. 92, 93 N. E. 901.
6 I Comyn on Contracts, 8. 7Calthorpe's Case, 3 Dy. 334b, 336b. 8Langdell's Summary of the Law of Contracts, Sec. 45, p. 58.
9 Leake on Contracts (Sixth Edition, Canadian Notes), 439.
10 Bishop on Contracts, Second Enlarged Edition, Sec. 38, p. 14. (An interesting collection of definitions is found in this citation.)
1 Lay v. Brown, 106 Ark. 1,151 S. W. 1001; Murphy v. Nett, 51 Mont. 82, L. R. A. 1915E, 797, 149 Pac. 713.
"If the venture subsequently proved disastrous, the purchasers, though they failed to realize their expectations, can not escape, on that ground, the payment of the purchase money which they bound themselves to pay." Hol-land v. Lee, 71 Md. 338, 18 Atl. 661.
which he would otherwise have been entitled to exercise.2 The question of the ultimate financial loss or gain is foreign to the doctrine of consideration, if the parties each have received what they have argeed upon. This proposition, though found in what are necessarily obiter,3 can not from its very breadth be illustrated by adjudicated cases except in fragments.4 Thus services rendered under contract to compensate for getting a majority of the property owners fronting on a street to sign a petition for paving the street, are a consideration, even though the petition prepared by the employer is so defective as to be ineffective.5 So a promise to lend money on certain storage receipts up to a certain amount is a consideration, even though the promisee did not need the money and did not borrow it.6 So a sale of personalty which proves to be worthless is a consideration if there is no fraud, mistake, breach of warranty, and the like.7 So a conveyance of property encumbered by liens which exceed the price ultimately brougnt for such property on a resale is a valuable consideration.8 A promise to commence and carry on proceedings in error, even though such proceedings were for the benefit of such promisor and not for the benefit of the promisee, is consideration for promise in return therefor.9 A contract whereby the owner agrees to furnish to the broker certain property to be sold, and the broker agreed to sell it, even if the owner might in good faith have made the broker's contract valueless by refusing to meet the prices of his competitors, has sufficient consideration.10 B's refraining from securing an attachment, after the transfer of an interest in a business, from A to X, is sufficient consideration for X's promise to pay A's creditor B, although as such business is managed, X ultimately receives nothing.11 A's promise to build a house upon a certain tract of land and to convey it to B, is supported by the consideration of B's payment to A of one-half of the cost of such building.12 Work which proves to be absolutely useless to the employer is a consideration.13 In a jurisdiction in which a married woman can make a contract, her promise to pay for food furnished to her is supported by the consideration of the furnishing of such food, although if it had not been for such express promise, her husband and not herself would have been liable for such food.14 A's act in relinquishing a homestead entry is a sufficient consideration for a promise, even though such promisor does not acquire such homestead entry.15 A's transfer of certain stock and other property to X is a consideration for B's promise to pay therefor, even if the transaction is one in which A secures a financial advantage by such transfer apart from B's promise.16 If A promises to marry B in consideration of B's going to a certain specified town, B's act in going to such town is a sufficient consideration for such promise.17 In some cases the technical benefit really involves a financial loss to each party and is so intended;18 or it really involves a financial loss to the promisor and a real benefit, in the popular sense, to the promisee.19
2 Nicholson v. Neary, 77 Wash. 294, 137 Pac. 492.
3Bigelow v. Bigelow, 95 Me. 17, 49 Atl. 49; Bigelow v. Burton, 64 Vt. 387, 16 L. R. A. 664, 24 Atl. 769.
4 See Sec. 542 et seq.
5Cory v. Newton, 9 Colo. App. 181, 48 Pac. 156.
6National Deposit Bank v. Bank (Ky.), 62 S. W. 725.
7Hogan v. Brown, 112 Ga. 662, 37 S. E. 880.
8 See Sec. 542.
9Dendy v. Russell, 67 Kan. 721, 74 Pac. 248.
10 Hollweg v. Schaefer Brokerage Co., 197 Fed. 689, 117 C. C. A. 83.
11 Miller v. Davis, 168 Ky. 661, 182 S. W. 839.
12 Clark v. Hindman, 46 Or. 67, 79 Pac. 56.
The cases which insist that there must be a real gain or loss do not look to the eventual result of the transaction, but to the reality of the consideration when the contract was entered into. In some cases, however, the practical results seem to be that an actual benefit or detriment is essential and not the mere acquisition or forbearance of an existing legal right. Thus a promise by a holder of many of the bonds of a corporation to pay certain coupons so as to prevent litigation which would delay the sale, the sale giving to the holders of such coupons all the rights which they could have asserted, without such contract.20 Mutual promises of stockholders to contribute in proportion to their holdings to discharge a supposed but non-existent personal liability to creditors of the corporation,21 or a promise by A, who was the father of B, deceased, that certain property of B's should become the property of C, if C refrained from establishing a devise of such property by B to C,22 have been held to have insufficient consideration. Some of these cases can be explained as cases in which there really was no legal right either forborne or acquired. It is true, however, that while the courts agree substantially in their abstract form of stating this principle, their practical deductions therefrom are by no means in accord.
13 West v. McDonald, 64 Or. 203, 127 Pac. 784, 128 Pac. 818.
14 Bell v. Rossignol, 143 Ga. 150, L. R. A. 1915D, 1184, 84 S. E. 542.
15Dohr v. Wolfgang, 151 Wis. 95, 138 N, W. 75.
16 Trustees v. Mebane, 165 N. Car. 644, 81 S. E. 1020.
17 Harvey v. Johnston, 6 C. B. 295. (Undoubtedly B had promised to marry A, but the question arose on a declaration which omitted such allegation.)
18 See Sec. 559 et seq.
19 See Sec. 557.
20 Morton Trust Co. v. Home Telephone Co., 66 N. J. Eq. 106, 57 Atl. 1020.
21 First National Bank v. LehnhofTs Estate, 77 Neb. 307, 112 N. W. 563 [affirming on rehearing, First National Bank v. LehnhofTs Estate, 77 Neb. 303, 109 N. W. 164].
Two groups of topics, remote from consideration as an element of the formation of a contract, are often confused with it. One group consists of facts such as fraud, misrepresentation or mistake, by which the contract in question is rendered either void or voidable. In case of this sort the acquisition or forbearance of a legal right is immaterial. Under the circumstances already discussed,28 one of these facts will prevent the formation of a valid contract, though a valuable consideration may be present. The mistake, fraud, and the like, may be as to the existence or reality of the consideration, in which case the contract may be doubly defective in lacking consideration as well as being void or voidable by reason of fraud, mistake, etc. The other group consists of topics to be treated subsequently under the head of discharge.24 If the right acquired by one party is the executory promise of the other, this forms a valuable consideration.25 The failure of the promisor to do what he agreed to do can not retroact and make the contract a nullity from the beginning. It has, therefore, nothing to do with the formation of the contract. The fact that it is termed "failure of consideration," and that in some cases it may discharge the party not in default, from the obligation of the contract, tends to a confusion of this topic with that of consideration proper. A more accurate statement of this idea of consideration is that a valuable consideration is some legal right acquired by the promisor in consideration of his promise, or forborne by the promisee in consideration of such promise.26
22 Graham v. Spence, 71 N. J. Eq. 183, 63 Atl. 344.
23 See ch. VI to XVIII.
24 See ch. LXXVIII et seq. 25 See Sec. 566.
26 Connecticut. Mascolo v. Monte-santo, 61 Conn. 60, 29 Am. St. Hep. 170, 23 Atl. 714.
Iowa. Riegel v. Ormsby, 111 la. 10, 82 N. W. 432.
Maryland. Scheffenacker v. Hoopes, 113 Md. Ill, 77 Atl. 130.
Minnesota. Cooper v. Hayward, 71 Minn. 374, 70 Am. St. Rep. 330, 74 N. W. 152.
Missouri. Brownlow v. Wollard, 66 Mo. App. 636.
Nebraska. Faulkner v. Gilbert, 57 Neb. 544. 77 N. W. 1072.
New Hampshire. Morse v. Bellows,