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 general rule that the legal right which is acquired by the promisor or which is forborne by the promisee, must be a genuine right in order to amount to a valuable consideration, must be qualified in the case of contracts which are entered into in order to compromise a disputed claim. The dispute between the parties may go to the existence of the claim, or it may be a dispute as to the amount due upon the claim, the existence of which is admitted. This dispute may be a dispute as to fact or a dispute as to law. In all cases in which the existence of the claim is in dispute, and in most of the cases in which the amount of the claim is in dispute, one of the parties to the dispute is in the wrong and the other is in the right. If, therefore, the law is to demand a forbearance of a genuine legal right as a consideration for the contract of compromise, no contract of compromise could be upheld, since one of the parties is giving more than he is legally bound to give, or the other party is receiving less than he is legally entitled to receive. The dispute may be as to the existence of a liquidated claim, where there is no dispute as to the amount which is due if anything is due, but only as to whether or not anything is due. It may be as to the amount which is due upon an unliquidated claim where there is no dispute as to the existence of the claim, but only as to the amount due thereon.1 In many cases, there is a dispute as to the existence of an unliquidated claim, where both the very existence of the claim and the amount, if any, due thereon, are in dispute.2
1Wood v. Whitehead Bros. Co., 165 N. Y. 545, 59 N. E. 357.
2Resseter v. Waterman, 151 111. 169, 37 N. E. 875 [reversing, 45 111. App. 155].
3 Forbes v. Bushnell, 47 Minn. 402, 50 N. W. 368; Coffin v. Landiff, 46 Pa. St. 426; Irish v. Dean, 39 Wis. 562.
4 Forbes v. Bushnell, 47 Minn. 402, 50 N. W. 368.
5Trudeau v. Poutre, 165 Mass. 81, 42 N. E. 508.
6 Turner v. Smith, 112 Ala. 334, 20 So. 486.
8 Roberts v. Carter, 31 111. App. 142.
9 Brown v. Kern, 21 Wash. 211, 57 Pac. 798 [citing, Curtiss v. Martin, 20 111. 557; Lee v. Oppenheimer, 32 Me. 253; Brooks v. White, 43 Mass. (2 Met.) 283, 37 Am. Dec. 95; Boyd v. Hitchcock, 20 Johns. (N. Y.) 76, 11 Am. Dec. 247; Le Page v. McCrea, 1 Wend. (N. T.) 164, 19 Am. Dec. 469; Kellogg v. Richards, 14 Wend. (N. Y.) 116; Evans v. Wells, 22 Wend. (N. Y.) 324; Keeler v. Salisbury, 33 N. Y. 648].
10 Abbott v. Doane, 163 Mass. 433, 47 Am. St. Rep. 465, 34 L. R. A. 33, 40 N. E. 197.
A dispute as to the existence,3 or as to the amount4 of a set-off against a liquidated claim has been said to render the entire claim unliquidated, even if the set-off arises out of a different transaction.5
If the parties agree that one of two specified amounts is due, but disagree as to which the amount is, a dispute exists.6 An anticipation of a dispute because of changed conditions is sufficient for the application of the theory of compromise of disputed v. Clark, 178 U. S. 353, 44 L. ed. 1099;
1Shahan v. Bayer Vehicle Co., 179 la. 023, 162 N. W. 221; Jarecki Mfg. Co. v. Cimarron River Oil & Gas Co.,
- Okla. - , 170 Pac. 252.
2 Illinois Central R. Co. v. Waterloo, C. F. & N. Ry. Co., - la. - , 164 N. W. 208 [opinion modified on petition for rehearing, Illinois Cent. R. Co. v. Waterloo, C. F. & N. Ry. Co.,
- la. - 165 N. W. 993]. 3Chicago, Milwaukee & St. Paul Ry.
Tanner v. Merrill, 108 Mich. 58, 65 N. W. 664.
4 Stanley-Thompson Liquor Co. v. Southern Colorado Mercantile Co. (Colo.), 178 Pac. 577; New York Life Ins. Co. v. MacDonald, 62 Colo. 67, 160 Pac. 193.
5 Stanley-Thompson Liquor Co. v. Southern Colorado Mercantile Co. (Colo.), 178 Pac. 577.
6 Schultz v. Farmers' Elevator Co., 174 la. 667, 156 N. W. 716.
claims.7 If there is no dispute as to the existence or as to the amount of the claim, we have the cases of payment of part of an undisputed, liquidated claim, as satisfaction of the entire claim, which has been discussed elsewhere.8
It has been said that the dispute must involve property.9 An alleged ground for the removal of an executor is said not to be a disputed claim, since no property rights are involved; and the question of compensation and expenses is to be decided by the court and not by the agreement of the parties.10