Consideration that has been delivered or provided in exchange for a promise or obligation. The phrase commonly appears in promissory notes and bills of exchange to confirm the instrument rests on valid consideration.
2
The benefit obtained by the burdened estate from services or facilities supplied under a covenant. Courts use the measure to decide whether a payment obligation has become excessive.
Each sense below has its own examples, sources, and questions.
Sense 1
1
Sense 1
Consideration that has been delivered or provided in exchange for a promise or obligation. The phrase commonly appears in promissory notes and bills of exchange to confirm the instrument rests on valid consideration.
Examples3
Eminent Domain Compensation Dispute
The United States takes temporary use of warehouse space owned by Valdez Steel for wartime storage. Valdez Steel claims compensation measured by the full rental value of the space during the taking period. The government argues that compensation should reflect only the long-term rental rate of bare space. The court rejects the government's position because limiting recovery to bare-space rent would fictionalize just compensation rather than providing a true substitute for the property taken.
Sense 2
2
Sense 2
The benefit obtained by the burdened estate from services or facilities supplied under a covenant. Courts use the measure to decide whether a payment obligation has become excessive.
United States v. General Motors Corp.323 U.S. 373, 378 (1945)
In 1928 General Motors Corporation leased a one-story warehouse building in Chicago for a term of twenty years for the storage and distribution of automobile parts and fitted the premises for this use. In 1942 the United States became subtenants of a portion of the floor space, leaving General Motors in possession of some 93,000 square feet.
On June 8, 1942 the United States filed a petition in the District Court seeking condemnation of the temporary use of the remaining space for a term ending June 30, 1943 pursuant to the Second War Powers Act. The court entered an order declaring the property condemned and granting the United States immediate possession, use, and improvement. General Motors removed its personal property from the area and dismantled bins and fixtures so that the space was available for government use by June 19.
At the trial for compensation the Government called a real estate expert who testified that the fair rental value of the space was 35 cents per square foot per year. General Motors called expert witnesses who testified that the fair rental value was 43 cents per square foot. It also introduced evidence that the rent it paid its landlord had varied from 41.9 to 43.24 cents per square foot during 1940 to 1942. General Motors then offered to prove items of cost caused by removal of the contents, including salaries of employees engaged in the work, compensation due employees put out of work, wages of janitors and watchmen, shipping costs, freight and haulage charges, rental of storage space, the value of bin equipment destroyed, and the estimated original cost of installation of fixed equipment lost, but the court sustained an objection to the offer.
The jury awarded compensation in a lump sum at a rate of approximately 40 cents per square foot for the term of one year. General Motors appealed to the Circuit Court of Appeals, which reversed the judgment by a vote of 2 to 1. The Supreme Court granted review of the ruling on the elements that may be considered in arriving at just compensation.
Valerie Viera borrows money from Vanessa Vinson and promises to repay the loan to Violet Vidal. In exchange for value received from Viera, Vinson's note states that the funds will be paid directly to Vidal. When Viera defaults, Vidal sues Vinson on the promise. The court holds that Vidal may enforce the obligation because the promise was made for value received and for Vidal's benefit, establishing her rights as a third-party beneficiary.
Lawrence v. Fox20 N.Y. 268 (1859)
Holly loaned a sum of money to Fox for a single day. At the moment of the advance Holly instructed Fox to repay that exact sum directly to Lawrence. Fox accepted the loan and expressly promised Holly that he would pay the amount to Lawrence. A third person who was present heard Holly give these directions concerning payment of the funds then being advanced.
Lawrence later commenced an action against Fox to recover the sum. At trial the defendant objected that the testimony of the person who overheard Holly's directions constituted inadmissible hearsay. The defendant further argued that any promise was void for lack of consideration and that no privity existed between Lawrence and Fox because the undertaking had been made solely to Holly.
The trial court overruled these objections and entered judgment for the plaintiff. On appeal the Supreme Court of New York affirmed that judgment.
Vasquez Imports receives a subpoena requiring production of documents that would authenticate their contents. The company asserts that compliance would constitute compelled testimony. The government offers immunity limited to the act of production itself. The court examines whether the immunity adequately protects against use of the compelled act, ensuring that the government cannot rely on the authentication implicit in the production to establish the documents' genuineness at trial.
United States v. Hubbell530 U.S. 27, 35–36 (2000)
In August 1994, an Independent Counsel was appointed to investigate possible violations of federal law relating to the Whitewater Development Corporation.
In December 1994, Webster Hubbell pleaded guilty to charges of mail fraud and tax evasion arising out of his billing practices as a member of an Arkansas law firm from 1989 to 1992.
He was sentenced to 21 months in prison.
As part of the plea agreement, Hubbell promised to provide the Independent Counsel with full, complete, accurate, and truthful information about matters relating to the Whitewater investigation.
While Hubbell was incarcerated in October 1996, the Independent Counsel served him with a subpoena duces tecum calling for the production of 11 categories of documents before a grand jury sitting in Little Rock, Arkansas.
Hubbell appeared before the grand jury and initially invoked his Fifth Amendment privilege.
After being granted immunity pursuant to an order under 18 U.S.C. § 6003(a), he produced 13,120 pages of documents and records.
The documents provided the Independent Counsel with information that led to a second prosecution.
On April 30, 1998, a grand jury in the District of Columbia returned a 10-count indictment charging Hubbell with tax-related crimes and mail and wire fraud.
The District Court dismissed the indictment on the ground that the Independent Counsel's use of the subpoenaed documents violated 18 U.S.C. § 6002.
The Court of Appeals vacated the judgment and remanded for further proceedings to determine the extent of the Government's independent knowledge of the documents.
On remand, the Independent Counsel acknowledged that he could not satisfy the reasonable particularity standard and entered into a conditional plea agreement with Hubbell.
The Supreme Court granted certiorari to determine the precise scope of a grant of immunity with respect to the production of documents in response to a subpoena.
How does the phrase 'value received' function in promissory notes and bills of exchange?
The phrase recites that consideration has already been delivered, satisfying the formal requirement that the instrument rest on valid consideration. Courts treat the recital as sufficient even when the actual payment of nominal consideration is not separately proved.
Supporting sources
Does a later promise acknowledging a past benefit become enforceable merely because it recites value received?
No. A promise made in recognition of a prior unrequested benefit is enforceable only to the extent necessary to prevent injustice and only when the promised amount is not grossly disproportionate to the value actually received. Gross disproportion defeats enforcement even when the promise is in writing.
Supporting sources
1
Excessive Payment Covenant Modification
Venture Holdings owns a parcel subject to a recorded covenant requiring monthly payments to Vitality Foods for private security and beach maintenance. After the city expanded its own services, the private offerings supplied only marginal additional value to the parcel. Venture Holdings sues to modify the obligation. The court reduces the fee because the payments have become excessive relative to the value received by the burdened estate while accounting for Vitality Foods' prior investments made in reliance on the covenant.
1 common questions
Students Frequently Ask...
When may a court modify a covenant to pay for services based on value received by the burdened estate?
Modification is available when the payment obligation becomes excessive relative to the cost of providing the services or the value the burdened estate actually receives. Any reduction for decreased value must still account for investments made by the service provider in reasonable reliance on the covenant's continued validity.
Supporting sources
20 N.Y. 268 (1859)
…of a parol promise; it stands, then, upon the same footing as a written one. Suppose the defendant had given his note in which, for value received of Holly, he had promised to pay the plaintiff and the plaintiff had accepted the promise, retaining Holly's liability. Clearly Holly could not have discharged that promise. No one can…