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.
The term "failure of consideration" imports that the party to whom the consideration moved has not received under the contract what it was agreed that he should receive.1 If he receives exactly what he has contracted for, and if he stipulated originally for a thing of value, he can not avoid the contract because it does not prove as advantageous to himself as he had anticipated,2 or because the thing for which he bargained and which he has received proves to be substantially worthless in fact.3 If A subscribes to certain books in the belief that the publication thereof will be continued for a certain time, or until the happening of a certain event, but no agreement is made on the part of the publishers to publish them for such time or until such event, A can not treat the discontinuation of the publication of such books as such a failure of consideration that he can avoid payment for the volumes which were actually delivered.4 If a mining lease does not in legal effect require the lessee to drill wells, his failure so to do is not failure of consideration, although the lessor may have expected that the lessee would drill such wells and that the lease would he profitable for both parties.5 If an oil and gas lease requires the lessee to drill a well within a certain time, the lessor can not treat the failure of the lessee to drill an additional number of wells, as failure of consideration, although such additional drilling would make 'the lease more profitable to both parties.6 If specific bonds are sold and there is no implied warranty of their validity, the fact that it is held that the city which issued them had no power to do so, does not amount to failure of consideration.7 If A knows that an appeal is pending which involves B's title to an undivided interest in certain realty in which A has an interest, and with knowledge of such facts A and B enter into a contract by which A is to purchase such realty at a partition sale, for the benefit of both in certain proportions, the fact that on appeal it is held that B had conveyed his undivided interest to X does not amount to failure of consideration.8 If the title to realty is in dispute and the vendee purchases the interests of both claimants, such vendee can not treat the lack of title in one of the claimants as a failure of consideration.9 If the original contract is modified by a mutual agreement of the parties and is then performed, neither of the parties to the original contract can claim a failure of consideration.10 Since the compromise of a claim, concerning which there is a bona fide dispute, is supported by sufficient consideration,11 neither party can claim that there is failure of consideration because of the fact that the adversary party was not entitled to the legal right which he had claimed;12 and accordingly a party who has given his note in compromise of such disputed claim can not set up a failure of consideration as a defense to an action on such note.13 One who has destroyed or defeated the legal rights which he was to receive under the original contract, can not set up failure of consideration.14 If A returns a deed for a patent right in certain territory to B, and B sells it to another, A can not set up such transaction as failure of consideration in an action on the notes which he had given for such deed.15 A leased to B the privilege of displaying stereopticon advertisements on the roof and side wall of A's building, at an agreed rent. Subsequently X, the owner of the building adjoining A's, leased his roof to another advertiser who put up a high screen which shut off the view of A's wall and roof. Such facts were not held to excuse B from paying rent.16
1 United States. Otis v. Cullum, 92 U. S. 447, 23 L. ed. 496.
Iowa. Simmons v. Sefrit, (la.), 125 N. W. 03; Sharp v. Betts, 165 la. 373, 145 N W 938.
Louisiana. New Orleans Polo Club v. Jockey Club, 128 La. 1044, 55 So. 668.
Minnesota. Mineral Land Investment Co v. Bishop Iron Co.. 134 Minn. 412. L. R. A. 1917D, 000, 150 N. W. 966
Rhode Island. Kendall v. Rossi, 35 R. I. 451, 45 L. R. A. (N.S.) 085, 87 Atl 186.
West Virginia. Carper v. United Fuel Gas Co.. 78 W. Va. 433, L. R. A. 1917A, 171, 89 S. E. 12.
2 United States. Tayloe v. Riggs, 26 U. S. (1 Pet.) 501, 7 L. ed. 275; Otis v. Cullum. 02 U. S. 447, 23 L. ed. 496.
Alabama. "Mertins v. Hubbell Publishing Co. 100 A1a. 311, 67 So. 275.
Colorado. Hurlburt v. Kepbart, 50 Colo. 353. 115 Pac. 521.
Florida. Southern Colonization Co. v. Derfler, 73 Fla. 924, L. R. A. 1917F, 744. 75 So. 700.
Indiana. Scott v. Scott, 105 Ind. 584, 5 N. E. 397.
Iowa. Simmons v. Sefrit, (la.), 125 N. W. 93; Sharp v. Betts, 165 la. 373, 145 N. W. 938.
Louisiana. Nabors v. Producers' Oil Co., 140 La. 985, L. R. A. 1917D, 1115, 74 So. 527.
Massachusetts. Palmer v. Guillow, 224 Mass. 1, 112 N. E. 493.
Minnesota. Bigelow v. Barnes, 121 Minn. 148, 45 L R. A. (N.S.) 203, 140 N. W. 1032; Mineral Land Investment Co. v. Bishop Iron Co., 134 Minn. 412, L. R. A. 1017D, 000, 150 N. W. 966.
Missouri. Priest v. Capitain (Mo.), 197 S. W. 83.
North Carolina. Johnston v. Smith, 86 N. Car. 498.
Pennsylvania. Oakford v. Nixon, 177 Pa. St. 76, 34 L. R. A. 575, 35 Atl. 588.
West Virginia. Carper ▼. United Fuel Gas Co., 78 W. Va. 433, L. R. A. 1917A, 171, 89 S. E. 12.
3 Hurlburt v. Kephart, 50 Colo. 353, 115 Par. 521; Varney v. Bradford, 86 Me. 510. 30 Atl. 115; Pittsburg Stove & Range Co. v. Pennsylvania Stove Co.. 208 Pa. St. 37, 57 Atl. 77.
4 Bigelow v. Barnes, 121 Minn. 148, 45 L. R. A. (N.S.) 203, 140 N. W. 1032.
5 Mineral Land Investment Co. v. Bishop Iron Co., 134 Minn. 412, L. R. A. 1917D, 900, J59 N. W. 966; Carper v. United Fuel Gas Co., 78 W. Va. 433, L. R. A. 1917A. 171, 89 8. E. 12.
6 Nabors v. Producers' Oil Co.. 140 La. 986, L. R. A. 1917D, 1116, 74 So. 527.
7 Otis v. Cullum, 92 U. S. 447, 23 L. fid. 496.
8 Sharp v. Betts, 165 la. 373, 146 N. W. 038.
9 Priest v. Capitain (Mo.), 197 8. W. 83.
10 American Mfg. Co. v. Helena Hardware Co., 119 Ark 282, 176 S. W. 306.
11 See Sec. 612 et seq.
12 Kendall v. Rossi. 35 R. T. 461, 46 L. R. A. (N.S.) 985. 87 Atl. 186.
13 Kendall v. Rossi. 35 R. T. 451, 46 L. R. A. (N.S.) 985. 87 Atl. 186.
14 Simmons v. Sefrit (la.), 126 N. W. 93.
Conversely, failure of consideration exists if the party to the contract does not receive substantially what he bargained for, although the advantage which he has gained by the transaction may exceed his expectations in other respects, so that on the whole he has gained as much as he could have expected.17 Under a contract between two clubs, by which it was agreed that the members of one club should join the other, the failure of a considerable number of the members of such club to join such other club amounts to a failure of consideration although the social standing of the club whose members were to join the other was such that the transaction proved of great benefit to such other club.18
 
Continue to: