Also known as: fair & valuable consideration · valuable consideration · adequate consideration
Written by attorneys · grounded in primary & secondary sources — see below
An exchange of something having economic worth that is adequate relative to the promise or transfer received. The exchange must be bargained for and not merely nominal or illusory to support contract enforceability or to establish bona fide purchaser status under recording statutes.
Omega Trade sent a demand letter to Sigma Outlet alleging breach of an exclusive supply agreement. Sigma's negotiator replied with an email offering a $1.2 million payment in exchange for a full release of claims. The court excluded the email from evidence because it was an offer of valuable consideration made during compromise negotiations.
Harold delivered an unrecorded deed to his nephew Leo, who fenced the land and built a visible shed. Valley Harvest later bought the same parcel for fair market value and recorded first, but its representative saw the improvements without inquiring. Leo prevailed because Valley Harvest's failure to investigate meant it lacked the fair and valuable consideration status required for bona fide purchaser protection under the notice recording act.
Select any source to read its text and confirm it supports the definition.
William Story promised his nephew $5,000 if the nephew refrained from drinking, smoking, swearing, and gambling until age twenty-one. The nephew performed the requested forbearance in full. The court held the forbearance supplied fair and valuable consideration that made the promise enforceable.
Brown Shoe Company proposed to acquire another shoe manufacturer through an exchange of shares valued at market rates. The transaction documents recited the number of shares and their fair market value. Regulators examined whether the exchange supplied fair and valuable consideration sufficient to avoid antitrust concerns over asset concentration.
A taxpayer transferred property to a religious organization and claimed a deduction equal to the property's fair market value. The IRS challenged the deduction because the taxpayer had received a partial return benefit. The Court required proof that the net transfer constituted fair and valuable consideration before allowing the full charitable deduction.
A patient signed a release waiving claims against the hospital in exchange for admission and treatment. The court scrutinized whether the release was supported by fair and valuable consideration or whether public policy rendered it unenforceable as an exculpatory agreement.
A subsequent purchaser must pay something of economic worth that is adequate in amount and take without notice of prior claims. Payment of fair market value satisfies the valuable consideration element, but visible possession or improvements by another party can still destroy bona fide purchaser status through inquiry notice.
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Yes. When a written contract requires both a discounted cash payment and binding promises to provide lifetime support and maintenance, the total package supplies adequate and full consideration in money or money's worth. The transfer is therefore excluded from an augmented estate calculation.
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An offer to pay money in exchange for a release of claims is evidence of furnishing valuable consideration in an attempt to compromise the claim. Such evidence is inadmissible to prove liability or the amount of a disputed claim.
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…that, in recent years, large numbers of historic structures, landmarks, and areas have been destroyed[^maj-2] without adequate consideration of either the values represented therein or the possibility of preserving the destroyed properties for use in economically productive ways.[^maj-3] The second is a widely shared belief that…