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.
If the original claim is unliquidated or in dispute, a different principle applies. Under the ordinary rules as to compromise of disputed claims,1 the courts have been obliged to choose between the rule, on the one hand, that if claims or defenses are asserted in good faith, or if the amount of the debt is unliquidated, the liquidation of the unliquidated amount or the adjustment of the dispute is of itself sufficient consideration without regard to the original merits of the case; and the rule, on the other hand, that it is impossible to liquidate unliquidated claims by mutual agreement, or to adjust disputes except by litigation. As between two rules, the courts have held that liquidation of unliquidated claims or the adjustment of genuine disputes is of itself a consideration.2 A dispute as to a set-off or counterclaim is held to render the entire claim unliquidated.3
10 Sigler v. Sigler, 98 Kan. 624, L. R. A. 1917A, 725, 158 Pac. 864. 11 See Sec. 599.
1 See Sec. 635.
2 United States. Musgrove v. Gibbe, 1 U. S. (1 Dall.) 216, 1 L. ed. 107.
Massachusetts. Brooks v. White, 43 Mass. (2 Met.) 283, 37 Am. Dec. 95.
Michigan. Loud v. Winchester, 62 Mich. 174, 17 N. W. 784.
Oklahoma. First National Bank v. Latham, 37 Okla. 286, 132 Pac. 891.
Pennsylvania. Savage v. Everman, 70 Pa. St. 315, 10 Am. Rep. 676.
Wisconsin, Palmer v. Yager, 20 Wis. 91.
3 Loud v. Winchester, 52 Mich. 174, 17 N. W. 784; Savage v. Everman, 70 Pa. St. 315, 10 Am. Rep. 676.
4 Musgrove v. Gibbs, 1 U. S. (1 Dall.) 216, 1 L. ed. 107; Brooks v. White, 43 Mass. (2 Met.) 283, 37 Am. Dec. 95; First National Bank v. Latham, 370 Okla. 286, 132 Pac. 891; Palmer v. Yager. 20 Wis. 91.
1See Sec. 612.
2 United States. San Juan v. St. John's Gas Co., 196 U. S. 510, 49 L. ed. 299.
Colorado. Stanley-Thompson Liquor Co. v. Southern Colorado Mercantile Co., - Colo. - , 4 A. L. R. 471, 178 Pac. 577.
Illinois. Canton Union Coal Co. v. Parlin & Orendorff Co., 215 111 244, 106 Am. St. Rep. 162, 74 N. E. 143.
Whether the payment of the exact amount claimed by the one party or conceded by the other without mutual concession is sufficient as a compromise without any new and additional consideration, is a question upon which there has been a conflict of authority. In some jurisdictions it has been held that no consideration exists under such circumstances,4 but in other jurisdictions it has been held that such payment amounts to consideration.5