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.
11 Cohen v. Grimes, 18 Tex. Civ. App. 327, 45 S. W. 210.
12Taylor v. Williams, 120 Ind. 414, 22 N. E. 118; Rodman v. Robinson, 134 N. Car. 503, 65 L. R. A. 682, 47 S. E. 19.
13 Backus v. Spaulding, 116 Mass. 418.
14 Puller v. Royal Casualty Co., 271 Mo. 369, 196 S. W. 755.
to rescind a sale;15 mutual promises to bequeath stock;16 a promise to make a will;17 a promise between the payees to give the whole of a note, payable to two jointly, to the survivor;18 to pay future premiums on an insurance policy;19 to pay an insurance policy;20 to let a contract;21 a contract by which a railway company and a steamboat line each agreed to deliver its freight to the other;22 a covenant by A to cut and deliver a certain amount of timber to B, and a covenant by B to pay therefor;23 a promise to assist in the sale of certain realty for a share of the commissions;24 and a promise to release a lien,25 are considerations for promises in return therefor.26 A contract between A and B, whereby each agrees to furnish half of the purchase price with which to buy certain property jointly, possesses sufficient consideration.27 A contract whereby A, a manufacturer, gives to B the exclusive agency for A's goods in a certain territory for a certain time, and B agrees to push the sale of A's goods and to sell no other goods during such time, has consideration.28 A covenant by a real estate agent to advertise
15Willard v. Tatum (Cal.), 31 Pac. 912.
16Crofut v. Layton, 68 Conn. 91, 35 Atl. 783.
17 Illinois. Lawrence v. Oglesby, 178 111. 122, 52 N. E. 945 [affirming 75 111. App. 6691.
Kentucky. Williamson v. Yager, 91 Ky. 282, 34 Am. St. Rep. 184, 15 S. W. 660.
Maine. Gilpatrick v. Glidden, 81 Me. 137, 10 Am. St. Rep. 245, 2 L. R. A. 662, 16 Atl. 464.
Nebraska. Brown v. Webster, 90 Neb. 591, 37 L. R. A. (N.S.) 1196, 134 N. W. 185.
New Jersey. Yearance v. Powell, 55 N. J. Eq. 577, 37 Atl. 735.
Pennsylvania. Hind v. Holdship, 2 Watts (Pa.) 104, 26 Am. Dec. 107.
18Green v. Whaley, 271 Mo. 636, 197 S. W. 355; Taylor v. Smith, 116 N. Car. 531, 21 S. E. 202.
19 Michigan, etc., Ins. Co. v. Custer, 128 Ind. 25, 27 N. E. 124; Ohio Farmers' Ins. Co. v. Stowman, 16 Ind. App. 205, 44 N. E. 558, 940. A promise to keep the buildings of another insured, which is performed for a time, renders the promisor liable. Criswell v. Riley, 5 Ind. App. 496, 30 N. E. 1101, 32 N. E. 814; Kaw Brick Co. v. Hogsett, 73 Mo. App. 432 [citing Thorne v. Deas, 4 Johns. 84].
20 Union, etc., Ins. Co. v. Hilliard, 63 O. S. 478, 59 N. E. 230.
22 Graham v. Macon, Dublin & Savannah R. R. Co., 120 Ga. 757, 49 S. E. 75.
23 Wiley v. Broaddus & Ives Lumber Co., 156 N. Car. 210, 72 S. E. 305.
24 Barnett v. Block, 94 Minn. 138, 102 N. W. 390.
25Schade v. Muller, 75 Or. 225, 146 Pac. 144; Holden v. Gilfeather, 78 Vt. 405, 63 Atl. 144.
26 See Sec. 566 et seq.
27 Stack v. Roth Bros. Co., 162 Wis. 281, 156 N. W. 148.
28 Peck-Williamson Heating & Ventilating Co. v. Miller (Ky.), 118 S. W. 376.
See also New Idea Spreader Co. v. Rogers, 122 Ya. 54, 94 S. E. 351.
« land and to endeavor to sell it is consideration for a promise to give him an exclusive agency.29 A promise by A to give to B a preferred right to buy certain stock in case A sells it, is consideration for a promise by B to A to pay dividends thereon, and to buy at a certain price at A's election.30 The act of a corporation in agreeing to accept a lease and to increase its stock, is consideration for a promise to give such lease and to buy a certain amount of such increased stock.31 Mutual promises apportioning liability between persons who are jointly and severally liable on a contract are binding between themselves, though the creditor is not bound thereby.32 A promise to deliver a piano is consideration for a promise to pay a certain sum when vendee takes possession of the piano, and to furnish a certain amount of advertising within a certain time.33 Where a promise is accepted as consideration, the party so accepting can not thereafter insist on performance as a condition to his own liability.34 Thus a promise to deliver coal is a consideration for a draft given in advance therefor.35 So if cosureties, who have paid a note in equal shares, agree to divide collections made by either from the principal debtor, a surety who has not collected anything from the principal may compel the other surety to share with him whatever he has collected from the principal.36 A contract by which A agrees to convey property to B, in consideration of B's promise to support A, has sufficient consideration.37 A promise to organize a corporation, on the one hand, and to subscribe for its bonds, on the other, will each support the other.38
29Sixta v. Ontonagon Valley Land Co., 148 Wis. 186, 134 N. W. 341.
30Vickrey v. Maier, 164 Cal. 384, 129 Pac. 273; Vickrey v. Maier, 164 Cal. 774, 129 Pac. 276.
31 Person & Riegel Co. v. Lipps, 219 Pa. St. 99, 67 Atl, 1081.
32 Bayne v. Greiner's Estate, 118 Minn. 350, 136 N. W. 1041.
33 Mail & Times Publishing Co. v. Marks, 125 la. 622, 101 N. W. 458.
34 Indiana. Ohio Farmers' Ins. Co. v. Stowmnn, 16 Ind. App. 205, 44 N. E. 558, 940.
New York. Tradesmen's National Bank v. Curtis, 167 N. Y. 194, 52 L. R. A. 430, 60 N. E. 429.
Texas. Arnold v. Chamberlain, 14 Tex. Civ. App. 634, 39 S. W. 201. Utah. Abba v. Smyth, 21 Utah 109,
59 Pac. 756.
Wyoming. Cramer v. Redman, 10 Wyom. 328, 68 Pac. 1003.
35 Tradesmen's National Bank v. Curtis, 167 N. Y. 194, 52 L. R. A. 430,
60 N. E. 429.
36 Cramer v. Redman, 10 Wyom. 328, 68 Pac. 1003.
37 Campbell v. McLaughlin, - Mo. - , 205 S. W. 18.
38Jermyn v. Searing, 225 N. Y. 525, 122 N. E. 706.
For the effect of fraud, mistake, misrepresentation, duress and undue but may enter into a new contract which has for its sole consideration the discharge of the liability which arises out of the original contract or transaction. If the original transaction never amounted to a contract, because the offer was not accepted properly, a subsequent promise based on such liability is not supported by a consideration,2 although it is, of course, perfectly possible that the fact of the new transaction may supply the want of proper acceptance, and that there may thus be a new contract supported by a new and distinct consideration. If the original transaction did not amount to a contract, because of a lack of consideration, no liability arises, and, accordingly, the discharge of such alleged liability is not a consideration for a new promise based thereon.3 If the original contract is unenforceable because of fraud, mistake, misrepresentation, and the like, the discharge of such contract does not amount to a consideration if the fraud, mistake or misrepresentation prevented the existence of a contract in the first instance.4 If, on the other hand, the fraud or misrepresentation is of such character as to render the original contract voidable at the election of the party who is subjected to such fraud, or who is misled by such misrepresentation, the right to avoid the contract is personal to such party, and it is a right which he may exercise or waive at his election. Accordingly, if he sees fit to affirm such transaction by entering into a new contract which is based upon the original transaction as a consideration, a sufficient consideration for the new promise exists.5 If the original contract is void or illegal because of its subject-matter, no liability arises thereunder, and a new promise which is based upon the discharge of such alleged liability lacks consideration.6 If the contract is one which must be in writing or which must be proved by writing and it is not in the form required by law or can not be proved by the evidence required by statute, the sufficiency of the discharge of liability arising under such a contract as a consideration is usually held to depend upon whether the contract itself is absolutely void, so that no rights can arise thereunder, or whether it is regarded as valid but merely unenforceable because of the lack of sufficient evidence.7 In the former case, since no rights exist under such contract, the discharge of such alleged rights can not amount to a consideration.8 In the latter case, the discharge of rights which have arisen under such a contract is a consideration, and the new contract is enforceable if its subject-matter is such that it does not require written evidence, or if the new contract complies with statutory requirements as to evidence.9 If the original contract is unenforceable because of the lack of capacity of one of the parties thereto, the discharge of rights, arising under such contract, is a sufficient consideration if such lack of capacity renders the contract merely voidable at the election of the party who lacks capacity.10 If, on the other hand, the original contract is absolutely void, because of lack of capacity, no contractual rights can arise thereunder, and, accordingly, the discharge of such alleged contractual rights can not be a consideration for a new promise.11 If the original contract was valid and enforceable when it was made, and if it has been discharged by reason of subsequent facts which terminate further liability upon the contract, or which give a defense to one of the parties to the contract if he wishes to avail himself of it, the liability which has arisen under such contract may be a consideration for a new promise based thereon;12 and if the party who may interpose such facts as a defense at his election sees fit to waive such defense and to make a new promise based upon such original liability, such original liability is a consideration for such new promise.13 If, on the other hand, the facts which operate as a discharge of such contract are of such a nature as to leave no liability of any sort, the original transaction can not be a consideration for a subsequent promise based thereon.14 Many of these forms of liability are called "moral obligations," and are discussed in connection with that topic.15
A different question is presented where the promise is one which, because of the incapacity of the promisor, or for some other reason, does not impose any legal liability. Such a promise is insufficient as a consideration, since the adversary party is not relying upon the mere uttering of the words of the promise, but upon the legal liability which attaches to the promise. A question which is still different is presented where the promise which is relied upon as a consideration, is one which is not absolutely void, but which, because of the incapacity of the promisor, or because of other facts surrounding the transaction, may be avoided by the promisor at his election. In such cases the right of avoiding such promise is ordinarily given to the promisor alone, either because of his incapacity or because of fraud, duress, and the like, which have been practiced upon him. In this case, the law is in the dilemma of being obliged to treat a voidable promise as a consideration, or of being obliged to allow the incapacity of one party, or the fraud or duress practiced upon him, to be ground for permitting the adversary party to escape all liability. Under these circumstances the courts hold that such voidable promise is a sufficient consideration.