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 dispute between the parties may be a dispute as to fact, or a dispute as to the law applicable to the conceded facts;1 or it may be a dispute which involves both law and facts.2 In each of these cases the compromise of such claim is held to be a sufficient consideration if the claim is of such character as to meet the other tests which have been suggested. A bona fide dispute as to the legal rights of the parties, all the facts being known, is said to be a sufficient basis of compromise.3 A compromise of a bona fide dispute as to the medium of payment is held to be valid.4 In some cases, however, the existence of a dispute as to facts seems to be necessary; and if no dispute as to facts exists, a genuine dispute as to the rights of the parties arising out of questions of law is held not to be a consideration.5 If a mortgagee collects a certain sum of money as an attorney's fee from the mortgagor in a foreclosure suit in a jurisdiction in which attorney's fees are recovered in foreclosure suits, no dispute can exist between the mortgagee and his attorney as to the attorney's right to receive at least the amount of the fee thus collected, although there may be a dispute as to whether the attorney is not, as against the mortgagee, entitled to a greater fee. Accordingly, if the attorney claims a greater amount and the mortgagee a less amount than the attorney's fee thus collected, the action of the mortgagee in sending check for a less amount to the attorney in full of his claim and the act of the attorney in making use of such check, do not constitute a valid compromise.6
7 Russell v. Lambert, 14 Ida. 284, L. R. A. 1915B, 20, 94 Pac. 54.
8 See Sec. 596.
9 Currier v. Clark, 15 Colo. App. 6, 60 Pac. 958.
10 Currier v. Clark, 15 Colo. App. 6, 60 Pac. 958.
1 Ferguson v. Grand Lodge, 174 la. 61, 156 N. W. 176.
2Danheiser v. Germania Savings Bank & Trust Co., 137 Tenn. 650, 194 S. W. 1094.
3 United States. San Juan v. St. John's Gas Co., 195 U. S. 510, 49 L. ed. 299.
Indiana. Proctor v. Heaton, 114 Ind. 250, 15 N. E. 21.
Kentucky. Gray v. United States Savings & Loan Co., 116 Ky. 967, 77 S. W. 200.
New Hampshire. Latulippe v. New England Investment Co., 77 N. H. 31, 86 Atl. 361.
Oregon. Roane v. Union Pacific Life Ins. Co., 67 Or. 264, 135 Pac. 892.
Pennsylvania. O'Keson v. Barclay, 2 Pen. & W. (Pa. St.) 531.
4 San Juan v. St. John's Gas Co., 195 U. S. 510, 49 L. ed. 299.
5 Prince v. Prince, 67 Ala. 565; Thompson v. Hudgins, 116 Ala. 93, 22 So. 632.