Also known as: money or moneys worth · valuable consideration
Written by attorneys · grounded in primary & secondary sources — see below
A form of consideration that possesses a quantifiable monetary value. It excludes intangible benefits such as love, affection, promises of marriage, or relinquishment of marital rights. Courts and statutes apply this standard to determine whether a transfer qualifies as a gift, supports a deduction, or satisfies recording-act requirements for bona-fide-purchaser status.
Select any source to read its text and confirm it supports the definition.
After Taylor threatened suit over a slip-and-fall injury, the store manager offered a gift card and reimbursement of medical costs in exchange for a release. Taylor later sought to introduce the offer to prove the store's liability and the amount of damages. Because the offer supplied valuable consideration to resolve a disputed claim, the evidence rule barred its use for that purpose.
Allied conveyed an office building to Stephen in settlement of a zoning suit, but Stephen never recorded. State A later bought the same building for cash and recorded first. State A officials had seen public minutes describing the earlier pledge yet treated them as political. Because State A paid money or money's worth without actual or inquiry notice of the prior deed, it qualified as a bona-fide purchaser entitled to priority.
Decedent transferred property to a third party during marriage. The surviving spouse claimed the transfer should augment the elective-share estate. The court excluded the property from the augmented estate because the decedent had received adequate and full consideration in money or money's worth for the transfer.
A settlor attempted to declare himself trustee of shares he expected to acquire in a corporation not yet formed. The court held that an expectancy cannot be the subject of a trust. Because the settlor received no money or money's worth in exchange, the attempted transfer remained a gratuitous undertaking unenforceable for lack of consideration.
Two unmarried partners agreed that one would provide homemaking services in exchange for a share of the other's earnings and property. The court enforced the agreement because the homemaking services constituted money or money's worth that supported a contractual obligation rather than a mere gratuitous promise.
Property owners executed a covenant barring sale to non-Caucasians. When a subsequent purchaser acquired the land for cash without knowledge of the covenant, the Court held that judicial enforcement of the covenant would violate equal protection. The cash payment supplied money or money's worth that rendered the purchaser a protected party whose title could not be burdened by the private racial restriction.
Contract consideration may include any bargained-for exchange, such as a promise of marriage or release of marital rights. For gift-tax and estate-tax purposes, however, only consideration reducible to a monetary value counts. Love, affection, and relinquishment of dower or curtesy are disregarded, so a transfer supported solely by those promises remains a taxable gift.
Supporting sources
…before this suit was instituted. On August 11, 1945, pursuant to a contract of sale, petitioners Shelley, who are Negroes, for valuable consideration received from one Fitzgerald a warranty deed to the parcel in question.[^maj-1] The trial court found that petitioners had no actual knowledge of the restrictive agreement at the time of…
…wife had merely an equitable lien on it. The court stated (pp 564-565) that the alleged assignment "if made in good faith for a valuable consideration
…of the law of contracts. It is elementary that an executory contract, in order to be enforceable, must be based upon a valuable consideration
A payment or promise of payment made to settle a disputed claim supplies money or money's worth. Evidence Rule 408 therefore excludes the offer when offered to prove liability or damages. The same payment may be admissible for a non-prohibited purpose such as proving bias.
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No. Payment of money or money's worth satisfies one element of bona-fide-purchaser status, but the purchaser must also take without actual or constructive notice. Inquiry notice arising from public minutes or newspaper articles defeats the status even when cash is paid.
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Congress and the courts treat relinquishment of dower, curtesy, or other marital claims as personal rather than monetary. Section 2043(b) and parallel gift-tax regulations therefore provide that such releases do not constitute consideration in money or money's worth, preventing conversion of nondeductible bequests into deductible claims.
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