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 cases the question primarily presented is one of the effect of non-performance of precedent concurrent or subsequent covenants. From this standpoint this topic must be divided into total and partial failure of consideration. Complete failure to perform an executory promise discharges the adversary party from performing his promise made in consideration thereof.1 Failure of consideration avoids a promissory note not in the hands of a bona fide holder.2 A note given for services to be performed thereafter, is discharged if not in the hands of a bona fide holder, if such services are not rendered.3 Notes given in consideration of water to be furnished for irrigation, are discharged if such water is not furnished when demanded. It is not necessary that the maker of such note should offer to release the payee from his agreement to furnish such water.4 If a note has been transferred before maturity to one who knows that the consideration therefor was an agreement by the payee to deliver coal, but who does not know that the payee will not perform such agreement, the indorsee may recover from the maker upon such note.5 Under a contract to exchange real estate, A agreeing to accept a lease back of the property conveyed by him, A's agreement to accept the lease is discharged by B's refusal to perform the contract where B falsely claims that the title to A's realty is defective.6 A agreed to release certain claims in consideration that his debtor, B, would not change a devise in a will previously executed by B. This contract is discharged by A's subsequently presenting such claims to the commissioners of B's estate, although B does not offer to refund the money received in part consideration therefor.7 A contract, to pay the debt of another, in consideration of forbearance of suit, is discharged if the original debtor is subsequently sued.8 An executory agreement for credit is discharged where the notes,9 given in consideration of such promise proved worthless. A contract for the sale of mining land, conditioned that the vendee shall, at a certain time, induce a corporation thereafter to be organized, to execute certain notes for the remainder of the purchase price, and a mortgage of such property to secure such notes, may be rescinded by the vendor if the notes and mortgage are not furnished.10
1 Missouri Pacific Ry. v. Yarnell, 65 Ark. 320; 46 S. W. 943; Russ Lumber Co. v. Muscupiabe, etc., Co., 120 Cal. 521; 65 Am. St. Rep. 186; 52 Pac. 995; Fink v. Chambers, 95 Mich. 508; 55 N. W. 375.
2 Sigworth v. Holcomb (la.), 79 N. W. 364; Fink v. Chambers, 95 Mich. 508; 55 N. W. 375.
3 Hays v. Plummer. 126 Cal. 107; 77 Am. St. Rep. 153; 58 Pac. 447;
Ray v. Moore, 24 Tnd. App. 480; 56 N. E. 937.
4 Russ, etc., Co. v. Water Co.. 120 Cal. 521; 65 Am. St. Rep. 186; 52 Pac. 995.
5 Tradesmen National Bank v. Curtis, 167 N. Y. 194; 52 L. R. A, 430; 60 N. E. 429.
6 Seannell v. Soda Fountain Co., 161 Mo. 606; 61 S. W. 889.