(Orig. Code 1863, § 2703; Code 1868, § 2697; Code 1873, § 2739; Code 1882, § 2739; Civil Code 1895, § 3656; Civil Code 1910, § 4241; Code 1933, § 20-301.)
Law reviews.- For article discussing the anachronistic nature of the Georgia Contracts Code as dramatized by comparing the doctrine of consideration as it is formulated in the Restatements of Contracts and in Code 1933, Title 20 (now this title), and in the interpretative approach Georgia courts have taken in dealing with such Code, see 13 Ga. L. Rev. 499 (1979). (But see amendments by Ga. L. 1981, p. 876.) For article surveying developments in Georgia real property law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 219 (1981).
JUDICIAL DECISIONSANALYSIS
Consideration is essence and soul of a contract; without consideration there is no life in the contract; it is as the law says, a nude pact, and no recovery can be had upon that contract. O'Neal v. Phillips, 83 Ga. 556, 10 S.E. 352 (1889); Monroe v. Martin, 137 Ga. 262, 73 S.E. 341 (1911); Strickland v. Farmers Supply Co., 14 Ga. App. 661, 82 S.E. 161 (1914).
Consideration means something of value in eye of the law, moving from plaintiff to defendant. It may be some benefit to plaintiff or some detriment to defendant. Austell v. Rice, 5 Ga. 472 (1848); Reynolds v. Nevin, 1 Ga. App. 269, 57 S.E. 918 (1907); Red Cypress Lumber Co. v. Beall, 5 Ga. App. 202, 62 S.E. 1056 (1908).
Motive with which party enters into contract is no part of contract's consideration. Brosseau v. Jacobs' Pharmacy Co., 147 Ga. 185, 93 S.E. 293 (1917).
Nudum pactum agreement constitutes no legal basis for claim of damages put forward as for breach of contract. Massell v. Fourth Nat'l Bank, 38 Ga. App. 631, 144 S.E. 806 (1928).
Nudum pactum rendered binding when one party performs and other party benefits by such performance. Barnes v. Didschuneit, 94 Ga. App. 661, 96 S.E.2d 216 (1956).
Consideration open to inquiry between original parties to show failure, illegality, or lack thereof.
- Between original parties, consideration expressed in contract is ordinarily open to inquiry for purpose of showing that contract was in fact executed without consideration and is nudum pactum, or that consideration was originally illegal and contract void, or that consideration has subsequently failed in whole or in part. Herrington v. Herrington, 70 Ga. App. 768, 29 S.E.2d 516 (1944).
Application to releases.
- General rule, that contract to bind must be supported by valid and sufficient consideration, applies in case of release. Claim of release can have no legal force without consideration. Parrott v. Baker, 82 Ga. 364, 9 S.E. 1068 (1889).
Novation must be supported by some new consideration. Bradbury v. Morrison, 93 Ga. App. 704, 92 S.E.2d 607 (1956).
Guaranty agreement was not novated by a cash collateral agreement entered during partnership's bankruptcy proceedings which simply delayed the amounts due. Westinghouse Credit Corp. v. Hall, 144 Bankr. 568 (S.D. Ga. 1992).
Accord and satisfaction is a contract, and must be based on valid consideration. Herrington v. Herrington, 70 Ga. App. 768, 29 S.E.2d 516 (1944).
Accord and satisfaction requires consideration for underlying settlement to be enforceable.
- If release or instrument relied on by defendant as accord and satisfaction is devoid of consideration, alleged settlement, under which it is contended defendant was released from liability, is unenforceable. Herrington v. Herrington, 70 Ga. App. 768, 29 S.E.2d 516 (1944).
Bills of exchange and promissory notes are exceptions to rule requiring consideration to give validity to contract; those documents prima facie import consideration. Boynton v. Twitty, 53 Ga. 214 (1874); Smith v. Hightower, 3 Ga. App. 197, 59 S.E. 593 (1907).
Commercial paper prima facie presumed to be founded upon consideration.
- Commercial paper is prima facie presumed to be founded on full legal consideration; especially is this true where there is a recital of "value received," or where instrument is under seal. Bing v. Bank of Kingston, 5 Ga. App. 578, 63 S.E. 652 (1909).
Promissory note stating it is for value received creates rebuttable presumption of consideration.
- In case of promissory note which states that it is for value received, consideration is presumed, but not conclusively. Presumption merely puts other party upon proof. Citizens' Bank v. Hall, 179 Ga. 662, 177 S.E. 496 (1934).
Cited in Black v. Maddox, 104 Ga. 157, 30 S.E. 723 (1898); Sivell v. Hogan, 119 Ga. 167, 46 S.E. 67 (1903); Cobb v. Jolley, 26 Ga. App. 123, 105 S.E. 630 (1921); Ross & Williams v. Southern Exch. Bank, 38 Ga. App. 532, 144 S.E. 338 (1928); Sheldon & Co. v. Emory Univ., 52 Ga. App. 628, 184 S.E. 401 (1936); Slaten v. College Park Cem. Co., 185 Ga. 27, 193 S.E. 872 (1937); Taylor v. Cureton, 196 Ga. 28, 25 S.E.2d 815 (1943); Ocean Lake & River Fish Co. v. Dotson, 70 Ga. App. 268, 28 S.E.2d 319 (1943); Simmons v. Noble, 84 Ga. App. 255, 65 S.E.2d 834 (1951); Flatauer v. Goodman, 84 Ga. App. 881, 67 S.E.2d 794 (1951); Carlisle v. General Tire Serv. Co., 86 Ga. App. 807, 72 S.E.2d 568 (1952); Renney v. Kimberly, 211 Ga. 396, 86 S.E.2d 217 (1955); Peerless Cas. Co. v. Housing Auth., 228 F.2d 376 (5th Cir. 1955); Wallace v. Bennett, 218 Ga. 78, 126 S.E.2d 619 (1962); Jennings v. Stewart, 106 Ga. App. 689, 127 S.E.2d 842 (1962); Jefferson Mills, Inc. v. United States, 259 F. Supp. 305 (N.D. Ga. 1965); Bonnett v. Cherokee Timber Corp., 222 Ga. 199, 149 S.E.2d 104 (1966); Moore v. Hughey, 133 Ga. App. 901, 212 S.E.2d 503 (1975); Trust Co. v. Rhodes, 144 Ga. App. 816, 242 S.E.2d 738 (1978); Insilco Corp. v. First Nat'l Bank, 156 Ga. App. 382, 274 S.E.2d 767 (1980); Newport Timber Corp. v. Floyd, 247 Ga. 535, 277 S.E.2d 646 (1981); Willis v. Rabun County Bank, 161 Ga. App. 151, 291 S.E.2d 52 (1982); McLain v. Heard, 162 Ga. App. 480, 291 S.E.2d 781 (1982); Sellers v. Citizens & S. Nat'l Bank, 177 Ga. App. 85, 338 S.E.2d 480 (1985); Scott v. Stroud, 186 Ga. App. 869, 369 S.E.2d 51 (1988); Roberson v. Eichholz, 218 Ga. App. 511, 462 S.E.2d 382 (1995); Han v. Han, 295 Ga. App. 1, 670 S.E.2d 842 (2008); Walia v. Walia, Ga. App. , S.E.2d (July 30, 2020).
Application
Consideration may be supplied by subsequent act.
- It is well settled that promise, although nudum pactum when made, because promisee is not bound, may become binding when promisee subsequently furnishes consideration by doing that which promisee was expected to do. Brown v. Bowman, 119 Ga. 153, 46 S.E. 410 (1903); Purcell v. Armour Packing Co., 4 Ga. App. 253, 61 S.E. 138 (1908); Peeples v. Citizens' Nat'l Life Ins. Co., 11 Ga. App. 177, 74 S.E. 1034 (1912).
When money consideration is stated in writing, contract is good although money not actually paid. Segars v. City of Cornelia, 60 Ga. App. 457, 4 S.E.2d 60 (1939).
Written extensions of option, reciting consideration of one dollar, receipt of which was acknowledged, cannot be held to be invalid because without consideration, although sum named may not have been actually paid. Jones v. Smith, 206 Ga. 162, 56 S.E.2d 462 (1949).
Love and affection or moral obligation as satisfying requirement of consideration.
- It is a general rule that, in order to be enforceable, every executory contract must be supported by a valuable consideration, or, in absence of valuable consideration, by good consideration founded either on love and affection toward one to whom natural duty exists, or on strong moral obligation supported either by some antecedent legal obligation, though unenforceable, at the time, or by some present equitable duty. McCowen v. McCord, 49 Ga. App. 358, 175 S.E. 593 (1934); Trustees of Jesse Parker Williams Hosp. v. Nisbet, 189 Ga. 807, 7 S.E.2d 737 (1940).
Termination of family controversies affords sufficient consideration to support contracts for such purposes.
- Compromises of doubtful rights are upheld by public policy of this state and by decisions of this court, especially when the compromises partake of the nature of family arrangements. Termination of family controversies affords consideration which is sufficient to support contract for such purposes. To render valid such a compromise agreement, it is not essential that matter should be really in doubt; but it is sufficient if parties should consider it so far doubtful as to make it the subject of compromise. Waxelbaum v. Carroll, 58 Ga. App. 771, 199 S.E. 858 (1938).
Provision that either party may withdraw before benefits of enterprise achieved, not rendering agreement unenforceable.
- Fact that agreement for purchase and resale of certain securities allowed either party in good faith to withdraw from joint account before any benefits of enterprise had been achieved, and thus before any equities had arisen in favor of other member, would not render agreement nugatory; in absence of limitation upon duration of agreement, such would seem to be right of either party, even in absence of any such specific authority. Clement A. Evans & Co. v. Waggoner, 197 Ga. 857, 30 S.E.2d 915 (1944).
Agreement, subsequent to written contract, for valuable consideration, may supplement written agreement.
- Additional obligation cannot be engrafted upon written contract by parol testimony, unless made subsequent to contract, upon valuable consideration. Smith v. Newton, 59 Ga. 113 (1877).
Executory contract founded on no consideration, either good or valuable is unenforceable. Georgia Cas. & Sur. Co. v. Hardrick, 211 Ga. 709, 88 S.E.2d 394 (1955).
Agreement to do what one is already legally bound to do is insufficient consideration for promise of another. Johnson v. Hinson, 188 Ga. 639, 4 S.E.2d 561 (1939).
Reliance on promise to pay.
- When a bank had a recorded lien on insured property which was destroyed by fire, and notified the insurer of the insurer's interest, and thereafter the insurer promised to pay to the lienholder any proceeds of the policy of insurance, the bank's reliance on the promise to pay, and the resulting forbearance of legal action, constituted sufficient consideration to support the insurer's promise to pay. Georgia Farm Bureau Mut. Ins. Co. v. Alma Exch. Bank & Trust, 195 Ga. App. 103, 392 S.E.2d 320 (1990).
Agreement to release debt.
- An oral agreement to release a debt without new consideration is not enforceable. NationsBank v. Tucker, 231 Ga. App. 622, 500 S.E.2d 378 (1998).
Promise to pay preexisting debt of another unenforceable without consideration.
- Promise to pay preexisting debt of another, without any detriment or inconvenience to creditor or any benefit accruing to debtor in consequence of undertaking is mere nudum pactum. Davis v. Tift, 70 Ga. 52 (1883); Burruss v. Smith & Turner, 75 Ga. 710 (1885).
Executory promise to pay preexisting debt of another with love and affection as consideration, unenforceable.
- Promise to pay existing debt of another, which has only love and affection for consideration, and which is executory, and from which no benefit accrues to promisor or to debtor, is nudum pactum and cannot be enforced. Wright v. Threatt, 146 Ga. 778, 92 S.E. 640, 1918C L.R.A. 541 (1917).
Love and affection for deceased husband not consideration for executory promise to pay estate's obligation.
- Mere sentiment, love, and affection, or respect for memory of deceased husband, by his widow, will not support executory promise on her part to assume payment of obligation due by his estate. McCowen v. McCord, 49 Ga. App. 358, 175 S.E. 593 (1934).
Extension of due date for debt, without additional consideration, unenforceable.
- If debt is due, extension of time, or arrangement to extend time of payment, without additional consideration, is unenforceable. Tallent v. Scarratt, 51 Ga. App. 577, 181 S.E. 141 (1935).
Promise of one to work unenforceable without corresponding promise to pay for services.
- Contract not created by promise on part of one to labor without any mutual concurrent obligation on part of order to pay for those services. Mason v. Terrell, 3 Ga. App. 348, 60 S.E. 4 (1908).
Landlord's promise, without consideration, to pay for damage to lessee's goods, not binding upon defendant. Plaza Hotel Co. v. Fine Prods. Corp., 87 Ga. App. 460, 74 S.E.2d 372 (1953).
Promissory note accompanying insurance application lacked consideration if policy never issued.
- When one applies for a policy of insurance, accompanying the application with note to cover premium, yet no policy of insurance was ever delivered or tendered to the person by or for the company, note was without any consideration to support the note. Home Ins. Co. v. Swann, 34 Ga. App. 19, 128 S.E. 70 (1924), later appeal, 35 Ga. App. 358, 133 S.E. 280 (1926), later appeal, 36 Ga. App. 601, 137 S.E. 304 (1927).
Indemnity agreement, like a release, must be supported by consideration. George R. Hall, Inc. v. Superior Trucking Co., 532 F. Supp. 985 (N.D. Ga. 1982).
Agreement whereby seller promises to supply buyer's reasonable requirements, in itself, without consideration.
- Where agreement did not specify amount limiting buyer's reasonable requirements and buyer had no obligation imposed under the agreement to purchase from seller, there was no consideration for seller's promise to supply buyer's reasonable requirements. Billings Cottonseed, Inc. v. Albany Oil Mill, Inc., 173 Ga. App. 825, 328 S.E.2d 426 (1985).
On facts, alleged contract was offer to make a gift and lacked valid consideration. Moore v. Logan-Long Co., 40 Ga. App. 259, 149 S.E. 321 (1929).
Claim of fraud based on unenforceable, broken promise, unsupported by consideration must fail. Phillips v. Atlantic Bank & Trust Co., 168 Ga. App. 590, 309 S.E.2d 813 (1983).
Consideration shown.
- Summary judgment in favor of the lessor on the lessor's breach of the lease claim was properly granted because there was no failure of consideration as the evidence showed that the lessor did provide the professional corporation with a functionally operational imaging center as required under the lease. Citrus Tower Blvd. Imaging Ctr. v. David S. Owens, MD, PC, 325 Ga. App. 1, 752 S.E.2d 74 (2013).
Consideration not shown.
- Defendant's promise to pay for the repairs was not enforceable because the promise was not given in return for any consideration. Johnson v. Hardwick, 212 Ga. App. 44, 441 S.E.2d 450 (1994).
Bond insurer offered no evidence that co-counsel for the estate of a minor child received any consideration for his agreement to assist the guardian of the child's estate in the probate process. Accordingly, no contract existed between the insurer and co-counsel, O.C.G.A. § 13-3-40. Hartford Fire Ins. Co. v. Schneider, F.3d (11th Cir. Mar. 6, 2008)(Unpublished).
In the plaintiff's suit on a promissory note, partial summary judgment was granted to the defendant as the note failed for want of consideration because, while the note stated that it was supported by a good and valuable consideration, it then specified that the consideration consisted of the money the plaintiff extended to the defendant for the down payment and repairs; thus, because the note specified a monetary or valuable consideration, the plaintiff could not rely on a good consideration that was founded on natural duty and affection or on a strong moral obligation to provide the plaintiff, the defendant's elderly mother, a residence at the house or repay the plaintiff the money to help the plaintiff buy a house of the plaintiff's own. Lewis v. Ikner, 349 Ga. App. 21, 825 S.E.2d 443 (2019).
In the plaintiff's suit on a promissory note, partial summary judgment was granted to the defendant as the note failed for want of consideration because the plaintiff's purported agreement to rescind the plaintiff's request to be named on the deed did not constitute valuable consideration to support the note as the plaintiff testified that it was merely the plaintiff's supposition that the defendant agreed to sign the note instead of naming the plaintiff on the deed; the note specifically purported to establish that the consideration was the money the plaintiff gave the defendant for the down payment and the repairs; and any consideration for the note was limited to the purported monetary consideration recited in the note. Lewis v. Ikner, 349 Ga. App. 21, 825 S.E.2d 443 (2019).
In the plaintiff's suit on a promissory note, partial summary judgment was granted to the defendant as the note failed for want of consideration because the plaintiff could not rely on any prior or contemporaneous oral agreement that the down payment money was subject to certain conditions as the transfer of the down payment money was memorialized in the gift letter, which stated that the defendant was under no obligation to repay the plaintiff and that the gift was subject to no terms or conditions; there was no consideration for any subsequent agreement for the defendant to repay the plaintiff; and the termite repairs money could not be deemed valuable consideration as it was past consideration. Lewis v. Ikner, 349 Ga. App. 21, 825 S.E.2d 443 (2019).
Contract requires consideration between parties and without consideration no enforcement.
- Defendant's theft by deception conviction, based upon a promise to provide brokerage services, was reversed on appeal, as the state, which elected to base its accusation on a promise for brokerage services, failed to show any consideration for them; as a result, no brokerage contract existed, and absent such, no theft by deception based upon a promise of brokerage services resulted. Campbell v. State, 286 Ga. App. 72, 648 S.E.2d 684 (2007).
Contracts Under Seal
Common law rules as to specialties, requiring no consideration, remain in force.
- Common law recognized as specialties, requiring no consideration, not only double or conditional bonds with penalty and defeasance clause, but other sealed and formally delivered obligations known as single bonds; these rules as to specialties remain of force in this state, and include like instruments creating gifts of money payable in future. Trustees of Jesse Parker Williams Hosp. v. Nisbet, 189 Ga. 807, 7 S.E.2d 737 (1940).
In case of a specialty, no consideration is necessary to give it validity even in a court of equity, because seal necessarily imports consideration which promisor or covenantor will be estopped to deny. Black v. Maddox, 104 Ga. 157, 30 S.E. 723 (1898).
When the value of the stock and the condition of the sellers' business were not unknown to the buyers at the time the buyers signed the agreement to indemnify, release and hold harmless the sellers from any and all claims on a note and guaranty, the buyers' urging of a failure of consideration availed them nothing, since the agreement for the sale of the stock was a contract under seal. Paige v. Jurgensen, 204 Ga. App. 524, 419 S.E.2d 722, cert. denied, 204 Ga. App. 922, 419 S.E.2d 722 (1992).
Sealed instrument estops covenantor from denying consideration, except for fraud.
- Solemnity of a sealed instrument imports consideration, or, to speak more accurately, it estops a covenantor from denying consideration, except for fraud. Weaver v. Cosby, 109 Ga. 310, 34 S.E. 680 (1899).
Contract valid even if recited amount was not paid.
- When the contract is under seal, thus raising a presumption of consideration, and a monetary amount is recited as consideration, the contract is valid notwithstanding the fact that the amount was not paid. Warthen v. Moore, 258 Ga. 198, 366 S.E.2d 666 (1988).
Either want or failure of consideration may generally be pleaded to contract under seal. Sims v. Scheussler, 5 Ga. App. 850, 64 S.E. 99 (1909).
Lack of consideration is good defense in equity to contract under seal.
- Courts of equity recognize consideration as essential element of all contracts, with few exceptions, and do not recognize formality of execution as a substitute therefor. Hence lack of consideration is a good defense in equity to contract under seal. Lacey v. Hutchinson, 5 Ga. App. 865, 64 S.E. 105 (1909).
Lack of lawful consideration for promissory note under seal is good defense against original payee.
- It is good defense to action on negotiable promissory note under seal, in hands of original payee, that the note was executed without any lawful consideration. Lacey v. Hutchinson, 5 Ga. App. 865, 64 S.E. 105 (1909).
OPINIONS OF THE ATTORNEY GENERAL
Authority to contract includes authority to give consideration.
- Since both counties and Department of Human Resources have authority to contract, it is self-evident that they have authority to give consideration for contract since consideration is essential to a contract and a contract without consideration is unenforceable. 1975 Op. Att'y Gen. No. 75-22.
Required waivers by environmental protection division personnel of liability for injuries lack consideration.- Requiring environmental protection division personnel to sign waivers of liability for injuries to person or property sustained while on premises for purpose of carrying out their duties of inspection constitutes unreasonable restriction on state's police power and any such waiver is not binding on EPD personnel because of lack of valid consideration. 1976 Op. Att'y Gen. No. 76-121.
RESEARCH REFERENCES
Am. Jur. 2d.
- 17 Am. Jur. 2d, Contracts, § 85 et seq.
C.J.S.- 17 C.J.S., Contracts, § 71.
ALR.
- Effect of recital in option of receipt of consideration which was not paid, 27 A.L.R. 1127.
Early death of vendor as affecting enforcement of contract to convey in consideration of contract for his or her support for life, 49 A.L.R. 601.
Promise to pay another's antecedent debt in consideration of agreement to cancel it as within statute of frauds as a promise to pay debt default or miscarriage of another, 74 A.L.R. 1025.
Original consideration as supporting obligation of accommodation parties who became such after the contract had been delivered and accepted, 74 A.L.R. 1097.
Consideration for assumption of obligation of lease by assignee thereof, 100 A.L.R. 1232.
Consideration for subscription agreements, 115 A.L.R. 589; 151 A.L.R. 1238.
What taxes are within contemplation of contract which provides for payment or assumption of taxes or varies consideration with reference to taxes, 124 A.L.R. 1020; 140 A.L.R. 517.
Creditor's statement or assurance to debtor, not supported by a consideration, that payment need to be made at time due, as binding upon creditor by way of estoppel, 124 A.L.R. 1248.
Promise of additional compensation for completing building or construction contract, 138 A.L.R. 136.
Rights and remedies as to premium where insured was under mistaken belief regarding value, nature, or existence of property subject of insurance, 138 A.L.R. 924.
Forbearance to sue on original obligation as consideration for note payable on demand, 141 A.L.R. 1481.
Promise to pay debt conditioned upon future act of creditor as tolling statute of limitations, 143 A.L.R. 1429.
Consideration for subscription agreements, 151 A.L.R. 1238.
Consideration for assumption of obligation as guarantor, surety, endorser, or indemnitor, after execution and delivery of principal contract, as predicable upon an antecedent promise to assume or furnish such obligation, 167 A.L.R. 1174.
Rights and liabilities as between employer and employee with respect to employee stock options, 96 A.L.R.2d 176.
Validity of individual employment contract for specific term which contains provision that employee will perform if physically able, if health permits, or the like, 7 A.L.R.3d 898.
Waiver of right to widow's allowance by postnuptial agreement, 9 A.L.R.3d 955.
Validity of contract for sale of "good will" of law practice, 79 A.L.R.3d 1243.
Enforceability of voluntary promise of additional compensation because of unforeseen difficulties in performance of existing contract, 85 A.L.R.3d 259.