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 jurisdictions where the consideration must appear the question of what amounts to a statement of the consideration has often been presented for decision. If the consideration is expressly stated, this rule is, of course, complied with, even if the consideration as expressed is a nominal one, such as one dollar.1 If a sealed contract is enforceable without a consideration, the presence of a seal upon a written contract dispenses with any statement of the consideration since there need be none, and if the contract is enforceable without a consideration, the memorandum need show only the actual terms of the contract.2 If the note or memorandum of the agreement shows on its face that the promise was made "for value received" no further statement of the consideration is necessary.3 Thus if a contract to answer for the debt of another purports to be for "value received," the consideration is sufficiently expressed.4 The same rule applies to contracts for the sale of realty.5 It is not necessary, however, either that the consideration be stated expressly or that the contract should be sealed. An unsealed contract or memorandum may be sufficient if the consideration reasonably and fairly appears from the entire instrument, without being expressly stated.6 As might be expected from so abstract a proposition, the courts which agree upon this rule do not agree upon its application. The following are examples of memoranda of a contract to answer for the debt of another, in which it was held that the consideration could be inferred reasonably from the writing itself: A letter written by A promising to pay B the amount due on certain lumber sold by B to C if B would deliver such lumber to C to enable C to perform his contracts;7 a letter by A promising that if B will release certain securities of A's employee C, A will guarantee performance by C of his promise to pay a certain sum annually on his debt to B, with a letter from C referring to A's letter and promising to pay such sum annually;8 a writing as follows: "I guarantee the payment of the contents of the within note to X, the one-half within six months and the other half within twelve months;"9 a promise to be responsible "for all such goods as B shall buy of X within one year from date" contemporaneously indorsed on a written contract of sale between X and B ;10 a written instrument addressed by A to B agreeing to extend A's guaranty of C's credit for a certain time to cover sales by B to C for such time ;11 an instrument referring to future sales to be made by B to C in which A agrees to guarantee C's "account;"12 a written promise as follows: "I will be responsible for the purchase of goods from X for B or by his order until I give them notice to the contrary";13 a letter introducing a new customer to a wholesale dealer, which states "I hereby guarantee the collection of any amount which you credit him with not exceeding two thousand dollars."14 A contract of guaranty made contemporaneously with the original contract and referring to it, need not express a separate consideration, since the consideration of the original contract supports the contract of guaranty.15 So as an example of this rule applying to contracts not to be performed within the year: A contract signed by both parties whereby A recites that he has employed B for a certain time at a certain salary, though there is no express promise by B to serve for such time,16 so in contracts of sale, a memorandum that A agrees to sell the merchandise in certain store buildings situated on certain lots to B in consideration of B's purchase of such lots is sufficient.17 On the other hand, the following are examples of memoranda of a contract to answer for the debt of another, insufficient because the consideration is not expressed with sufficient clearness; an agreement by A, the holder of a chattel mortgage given by C to pay C's debt to B if B would forbear suit,18 and an agreement by A to pay so much of C's note to B as is unpaid on a certain day, though the agreement is dated the same day as the note and recites that the note is given in satisfaction of a mortgage executed by C to B.19 A contract of guaranty executed after the principal obligation is incurred must express the consideration if this rule is in force.20 Thus a mere indorsement of a note has been held an insufficient contract of guaranty.21
695; Lester v. Heidt, 86 Ga. 226; 10 L. R. A. 108; 12 S. E. 214; Brun-dige v. Blair, 43 Kan. 364; 23 Pac. 482; Parker's Heirs v. Bodley, 4 Bibb. (Ky.) 102; Schenck v. Improvement Co., 47 N. J. Eq. 44; 19 Atl. 881; Edichal Bullion Co. v. Gold Mining Co., 87 Va. 641; 13 S. E. 100; Buck v. Pickwell, 27 Vt. 157.
6Catterlin v. Bush, 39 Or. 496; 65 Pac. 1064.
1 Boiling v. Munchus, 65 Ala. 558.
2 United States v. Linn, 15 Pet. (U. S.) 290; Edelen v. Gough, 5 Gill. (Md.) 103; Johnston v. Wadsworth, 24 Or. 494; 34 Pac. 13; Kuener v.
Smith, 108 Wis. 549; 84 N. W. 850. This rule is sometimes distorted into the form that the seal imports a consideration.
See Sec. 561-563.
3 Flowers v. Steiner, 108 Ala. 440; 19 So. 321; McMahan v. Jacoway, 105 Ala. 585; 17 So. 39; Whitney v. Stearns, 16 Me. 394; Dahlman v. Hammel, 45 Wis. 466; Day v. Elmore, 4 Wis. 190.
4 Martin v. Powder Co., 2 Colo. 596; Osborne v. Baker, 34 Minn. 307; 57 Am. Rep. 55; 25 N. W. 606; Miller v. Cook, 23 N. Y. 495; Dahlman v. Hammel, 45 Wis. 466.
5 Cheney v. Cook, 7 Wis. 413.
6 Otis v. Hazeltine, 27 Cal. 81; Weldin v. Porter, 4 Houst. (Del.) 236; Baltimore Breweries Co. v. Callahan, 82 Md. 106; 33 Atl. 460; Ordeman v. Lawson, 49 Md. 135; Straight v. Wight, 60 Minn. 515; 63 N. W. 105; Church v. Brown, 21 N. Y. 315; Reid v. Packing Association, 43 Or. 429; 73 Pac. 337: Van Doren v. Roepke, 107 Wis. 535; 83 N. W. 754. So in contracts to answer for the debt of another. Straight v. Wight, 60 Minn. 515; 63 N. W. 105; Highland v. Dresser, 35 Minn. 345; 29 N. W. 55; Church v. Brown, 21 N. Y. 315; Waldheim v. Miller, 97 Wis. 300; 72 N. W. 869.
7 Choate v. Hoogstraat (Wis.), 105 Fed. 713.
8 Barney v. Forbes, 118 N. Y. 580; 23 N. E. 890; distinguishing Evans-ville National Bank v. Kauffman, 93 N. Y. 273; 45 Am. Rep. 204; as a case in which no consideration appeared.
9 Neelson v. Sanborne, 2 N. H. 413; 9 Am. Dec. 108.
10 Church v. Brown, 21 N. Y. 315.
11 Coxe Bros. v. Milbrath. 110 Wis. 499: 86 N. W. 174.
12 Waldheim v. Miller, 97 Wis. 300; 72 X. W. 869.
13 Williams v. Ketchum, 19 Wis. 231.
14 Eastman v. Bennett, 6 Wis. 232; approved in Young v. Brown, 53 Wis. 333; 10 X. W. 394.
15 Davis v. Tift. 70 Ga. 52: Nich. ols. etc., Co. v. Dedrick, 61 Minn. 513; 63 X. W. 1110; Erie, etc.. Bank v. Coit, 104 X. Y. 532; 11 X. E. 54.
16 Baltimore Breweries Co. v. Callahan, 82 Md. 106; 33 Atl. 460. 17 Van Doren v. Roepke, 107 Wis. 535; 83 X. W. 754.
18Twohy Mercantile Co. v. Drug Co., 94 Wis. 319; 68 X. W. 963.
19 Lindsay v. McRae, 116 Ala. 542: 22 So. 868.
20 Brewster v. Silence, 8 X. Y. 207: Hall v. Farmer. 2 X. Y. 553.
21 Schafer v. Bank. 59 Pa. St. 144; 98 Am. Dec. 323; Parry v. Spikes. 49
Among contracts in consideration of marriage a promise by A to pay B "on the wedding day when she shall become my wife the sum of one thousand dollars" has been held insufficient.22 Among contracts for the conveyance of realty a promise by A to B, his wife, who has left him, that if she will come back he will do as he has agreed and will give her a deed of sixty acres, has been held insufficient.23