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 other jurisdictions a nominal consideration is insufficient.1 A contract which recites a "consideration of $1 and other good and valuable considerations in hand paid" as consideration for a promise by lessor to pay three thousand, nine hundred dollars for the conveyance of certain buildings on her land, which, in law, belonged to her;2 a contract for oil or mining rights in consideration of one dollar;3 or an option upon a nominal consideration,4 as an option upon property of substantial value, given in consideration of one dollar,5 have all been held not to be supported by sufficient consideration. If an option is given in consideration of one dollar and the services of the holder of the option in advertising and listing the property on which the option is given, the sum of one dollar is a nominal consideration, and it is error to charge that if that sum is paid, a sufficient consideration for the option exists.6 One dollar is not sufficient consideration for a release of a debt of almost four hundred dollars.7 A recital of one dollar is said not to import consideration.
15Quebe v. Gulf, Colorado & Santa Pe Ry. Co., 98 Tex. 6, 81 S. W. 20.
16St Clair v. Marquell, 161 Ind. 56, 67 N. E. 693.
17Lovett v. Eastern Oil Co., 68 W. Va. 667, Ann. Cas. 1912B, 360, 70 S. E. 707.
18 Strong v. Whybark, 204 Mo. 341, 12 L. R. A. (N.S.) 240, 102 S. W. 968.
19Schapiro v. Howard, 113 Md. 360, 78 Atl. 58.
20 Lawrence v. McCalmont, 43 U. S. (2 How.) 426, 11 L. ed. 326; Silver v. Kent, 105 Fed. 840.
21 Guyer v. Warren, 175 111. 328, 51 N. E. 580.
22 Boiling y. Munchus, 65 Ala. 558.
23 Alabama Central Ry. Co. v. Long, 158 Ala. 301, 48 So. 363; Southern Bell Telephone & Telegraph Co. v. Harris, 117 Ga. 1001, 44 S. E. 885.
24 WatkinB v. Robertson, 105 Va. 269, 115 Am. St. Rep. 880, 5 L. R. A. (N.S.) 1194, 54 S. E. 33.
1 United States. Velie Motor Car Co. v. Ropmeier Motor Car Co., 194 Fed. 324.
The recital of the consideration as "one dollar each to the other paid," imports no consideration.8
Since the consideration must be adequate where money is to be paid for money,9 a nominal consideration in money is not sufficient for a promise to pay money.10 A consideration of one dollar will not support a promise to pay more than a thousand dollars,11 nor will one cent support a consideration to pay six hundred dollars.12 The doctrine of nominal consideration should have no place in our law. If we are to insist upon a consideration to support an executory promise, it must at least be a genuine and substantial consideration. If we are ready to dispense with the necessity of consideration, a higher morality than that at present demanded by our law might require the performance of every promise which is made fairly and deliberately, and upon the performance of which the promisee has relied in good faith. To permit the nominal consideration, especially in jurisdictions where the recital of consideration is conclusive, is to reduce the doctrine of consideration to a requirement of form, and not of substance; a form as empty as the seal, but lacking its historic dignity, and yet to demand that form before the law will compel the perlorinance of the most deliberate promise.
Colorado. Rude v. Levy, 43 Colo. 482, 24 L. R. A. (N.S.) 01, 96 Pac. 560.
Kentucky. Berry v. Frisbie, 120 Ky. 337, 86 S. W. 558; Murphy v. Reed, 125 Ky. 585, 128 Am. St. Rep. 259, 10 L. R. A. (N.S.) 195, 101 S. W. 964; Kille-brew v. Murray, 151 Ky. 345, 151 S. W. 662; Stamper v. Combs, 164 Ky. 733, 176 S. W. 178.
Michigan. German Corporation v. Negaunee German Aid Society, 172 Mich. 650, 138 N. W. 343.
Mississippi. Smith v. Cauthen, 98 Mies. 746, 54 So. 844.
Nebraska. Krause v. Stevens (Neb.), 172 N. W. 245.
Texas. Great Western Oil Co. v. Carpenter, 43 Tex. Civ. App. 229, 95 S. W. 57.
2Precht v. Howard, 187 N. Y. 136, 9 L. R. A. (N.S.) 483, 79 N. E. 847 [for full statement of facts, see Precht v. Howard, 110 App. Div. 680].
3 Federal Oil Co. v. Western Oil Co., 112 Fed. 373; German Corporation v.
Negaunee German Aid Society, 172 Mich. 650, 138 N. W. 343; Great Western Oil Co. v. Carpenter, 43 Tex. Civ. App. 229, 95 S. W. 57. A mining lease "in consideration of one dollar" which was never paid, and the payment of which was not recited, was not upon valuable consideration. Killebrew v. Murray, 151 Ky. 345, 151 S. W. 662.
4 Stamper v. Combs, 164 Ky. 733, 176 S. W. 178.
5 Rude v. Levy, 43 Colo. 482, 24 L. R. A. (N.S.) 91, 96 Pac. 560; Murphy v. Reed, 125 Ky. 585, 128 Am. St. Rep. 259, 10 L. R. A. (N.S.) 195, 101 S. W. 964.
I Smith v. Cauthen, 98 Miss. 746, 54 So. 844.
7 Rohwer v. Burrell, 42 Utah 510, 134 Pac. 573.
8 Velie Motor Car Co. v. Kopmeier Motor Car Co., 194 Fed. 324. (It may well mean the exchange of the same dollar.)
9 See Sec. 643.