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.
In some cases, the want of a reasonable ground of belief in the claim which is asserted seems to be regarded as equivalent to an absence of good faith, and it is said that if the claim, the waiver of which is relied upon as a consideration, is so clearly unenforceable that it can not be entertained in good faith, a compromise based on such waiver lacks consideration.1 Thus a dismissal of a groundless and trumped-up contest of a homestead entry brought to extort money;2 compromise of an alleged claim for the seduction of promisee's fiancee;3 an agreement not to issue execution on an alleged judgment which clearly has no existence;4 an unwarranted objection to the use by another of a certain name in business;1 forbearance by testator's father, who could not have maintained an action to contest testator's will to bring such action;6 and a release of a claim for insurance upon payment of part of the amount due, in consideration of the waiver by the insurance company of a defense which had no merit and which it must be presumed to know was without merit,7 are not considerations. Settlement of a claim for fraud was held invalid where there was no legal right to punitive damages and where the amount which was promised by the party guilty of the fraud was so great that it could not be the basis of an honest claim.8
9 Morecraft v. Allen, 78 N. J. L. 729, L. R. A. 1915B, 1, 75 Atl. 920.
10Morecraft v. Allen, 78 N. J. L. 729, L. R. A. 1915B, 1, 75 Atl. 920. See Sec. 610.
11 Morecraft v. Allen, 78 N. J. L. 729, L. R. A. 1915B, 1, 75 Atl. 920.
12 See Sec. 610.
1 Illinois. Knotts v. Preble, 50 111. 226, 99 Am. Dec. 514.
Indiana. Schnell v. Nell, 17 Ind. 29, 79 Am. Dec. 453.
Iowa. Peterson v. Breitag, 88 la. 418, 55 N. W. 86.
Kansas. Price v. Bank, 62 Kan. 743, 64 Pac. 639.
Kentucky. Mercer v. Mercer, 87 Ky. 30, 7 S. W. 401; Creutz v. Heil, 89 Ky. 429, 12 S. W. 926.
Missouri. Long v. Towl, 42 Mo. 545, 97 Am. Dec. 355.
Nebraska. Fitzgerald v. Construction Co., 44 Neb. 463, 62 N. W. 899; Gering v. School District, 76 Neb. 219, 107 N. W. 250.
New Hampshire. Pitkin v. Noyes, 48 N. H. 294.
Pennsylvania. Kesler's Estate, 143 Pa. St. 386, 24 Am. St. Rep. 557, 13 L. R. A. 581, 22 Atl. 892.
Wisconsin. Fuller v. Green, 64 Wis. 159, 54 Am. Rep. 600, 24 N. W. 907.
2 Duck v. Antle, 5 Okla. 152, 47 Pac. 1056.
3 Case v. Smith, 107 Mich. 416, 61 Am. St. Rep. 341, 31 L. R. A. 282, 65 X. W. 279.
4 Price v. Bank, 62 Kan. 743, 64 Pac. 639.
In many of the foregoing cases the question of the good faith of the claimant is ignored if the claim seems to the court to be without any reasonable basis.9 A's promise to B to forbear instituting proceedings in bankruptcy against X, is not a consideration if such proceedings could not have been maintained, even though A believed in good faith that they could have been maintained.10 Delay in filing a mechanic's lien where no legal right to such lien existed is no consideration.11 Surrender by A to B of B's property upon which A erroneously but in good faith thinks that he has a lien, is no consideration.12
It will be seen from a comparison of the cases that the same court may in one case lay down good faith as the test for consideration in these cases; in another case, it may emphasize the necessity of an actual right which is forborne; while in other cases it may suggest that the want of an apparent or colorable right establishes an absence of good faith.
The doctrine of compromise of disputed claims is necessary to uphold a contract, only where the second promise is for the performance of the first contract with a change as to the amount of the consideration, but not as to the quality or kind, to be furnished by one party, while the covenants of the other party are the same as in the original contract, and where, but for the doctrine of compromise of disputed claims, we would have a promise in consideration of the performance of a prior valid contract,13 or where the consideration for a promise to pay money is a discharge of a claim for money, in which case, but for the doctrine of the compromise of disputed claims, the consideration would be inadequate.14
5 Converse v. Hood, 149 Mass. 471, 4 L. R. A. 521, 21 N. E. 878.
6 House v. Callicott, 83 Miss. 506, 35 So. 761.
7Rauen v. Prudential Insurance Co., 129 la. 725, 106 N. W. 198.
8 McNair v. Benson, 63 Or. 66, 126 Pac. 20.
9Rauen v. Prudential Ins. Co., 129 la. 725, 106 N. W. 198; House v. Callicott, 83 Miss. 606, 35 So. 761.
10 Ecker v. McAllister, 54 Md. 362.
11 Dipaula v. Green, 116 Md. 491, 82 Atl. 205.
12McGlynn v. Scott, 4 N. D. 18, 58 N. W. 460.