Mere inadequacy of consideration alone will not void a contract. If the inadequacy is great, it is a strong circumstance to evidence fraud; and, in an action for damages for breach of a contract, the inadequacy of consideration will always enter as an element in estimating the damages.
(Orig. Code 1863, § 2706; Code 1868, § 2700; Code 1873, § 2742; Code 1882, § 2742; Civil Code 1895, § 3659; Civil Code 1910, § 4244; Code 1933, § 20-307.)
Cross references.- Additional provisions regarding inadequacy of consideration, § 23-2-2.
Law reviews.- For article discussing effect of contracts involving fraud or inadequate consideration, see 4 Ga. L. Rev. 469 (1970). 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 Restatement of Contracts and in Code 1933, Title 20 (now this title), and 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.)
JUDICIAL DECISIONS
Courts not authorized to declare contract void merely because contract may be unwise or foolish. Equitable Loan & Sec. Co. v. Waring, 117 Ga. 599, 44 S.E. 320, 97 Am. St. R. 177, 62 L.R.A. 93 (1903); Singer v. Grand Rapids Match Co., 117 Ga. 86, 43 S.E. 755 (1903).
Adequacy determined at time of execution of contract. Wilson v. Strange, 235 Ga. 156, 219 S.E.2d 88 (1975).
Adequacy or inadequacy is subject to be considered by parties at time parties make contract. There is no law regulating amount of consideration necessary to support a particular promise. If parties have capacity to contract, and there is no fraud or misplaced confidence, and there is any valuable consideration, courts will enforce contract according to contract's terms. Atlanta & W.P.R.R. v. Camp, 130 Ga. 1, 60 S.E. 177, 124 Am. St. R. 151, 15 L.R.A. (n.s.) 594, 14 Ann. Cas. 439 (1908).
Regarding contracts generally, great inadequacy of consideration is strong circumstance to evidence fraud, but inadequacy of consideration alone will not void contract. Pacific Nat'l Fire Ins. Co. v. Beavers, 87 Ga. App. 294, 73 S.E.2d 765 (1952).
Inadequacy of price, combined with circumstances of suspicious nature, may void contract.
- Inadequacy of price, as a general proposition, will not, per se, be sufficient ground to set aside conveyance in court of equity; yet, that circumstance, taken in connection with others of suspicious nature, may afford such vehement presumption of fraud, as will authorize court to set contract aside. Lasater v. Petty, 220 Ga. 592, 140 S.E.2d 864 (1965).
Gross inadequacy of consideration in contract, when coupled with other circumstances indicative of fraud, will authorize setting aside of contract. Sumner v. Sumner, 121 Ga. 1, 48 S.E. 727 (1904).
Inadequacy of consideration could establish breach of contract.
- While mere inadequacy of consideration alone will not void a contract, O.C.G.A. § 13-3-46, it can support a breach of contract claim. As there was a jury question as to whether a billboard advertising company's failure to provide advertising for a campground resulted in a partial failure of consideration, the company was not entitled to summary judgment on the campground's claim of breach of the parties' sign lease. Merritt v. Marlin Outdoor Adver., LTD., 298 Ga. App. 87, 679 S.E.2d 97 (2009).
When inadequacy of consideration shocks moral sense, other circumstances seized upon to void agreement.
- Inadequacy of price not sufficient per se to set aside sale, unless so gross as, when combined with other circumstances, to amount to fraud; but if it be great, it is of itself a strong circumstance to evidence fraud; and this is true where it is attended by any other fact showing transaction to be unfair or unjust, or against good conscience. Parker v. Glenn, 72 Ga. 637 (1884).
Some other circumstance, such as fraud, mistake, misapprehension, surprise, irregularity, or anything else which conduces to inadequacy of price, will be readily seized upon to void agreement when inadequacy is such as to shock the moral sense. Pacific Nat'l Fire Ins. Co. v. Beavers, 87 Ga. App. 294, 73 S.E.2d 765 (1952).
Mere inadequacy of price not alone sufficient reason for setting aside deed to land, especially if allegation as to land's real value is uncertain as to time when land was of that value - whether at date of sale, or that of bringing suit. Hickman v. Cornwell, 145 Ga. 368, 89 S.E. 330 (1916).
Mere inadequacy of consideration will not authorize finding holder of note not bona fide purchaser. Hartfelder & Cochran v. Clark, 10 Ga. App. 422, 73 S.E. 608 (1912).
Absent fraudulent intent, deed from husband to wife for inadequate consideration valid as to creditors.
- Mere inadequacy of consideration in deed from husband to wife, even if he was insolvent at time of its execution, will not of itself void deed at instance of creditors, if there was no intention to hinder, delay, or defraud the creditors. Hawkinsville Bank & Trust Co. v. Walker, 99 Ga. 242, 25 S.E. 205 (1896).
Contract reciting consideration of one dollar valid although consideration not actually paid.
- If contract contains recital of payment of one dollar as its consideration, it is valid though sum named was not actually paid. It creates obligation to pay that sum, which can be enforced by other party. Nathans v. Arkwright, 66 Ga. 179 (1880); Southern Bell Tel. & Tel. Co. v. Harris, 117 Ga. 1001, 44 S.E. 885 (1903).
O.C.G.A.
§ 13-3-46 will not open suit for breach to defense based on mere inadequacy of consideration. - Provision of law which says that on suit for damages for breach of contract, inadequacy of consideration will always enter as element in estimating damages, will not open action for breach of contract to defense which is grounded in mere inadequacy of consideration alone. Yaryan Rosin & Turpentine Co. v. Haskins, 29 Ga. App. 753, 116 S.E. 913 (1923).
O.C.G.A.
§ 13-3-46 not controlling where creditor attacks deed of debtor to third party for fraud. - Generally speaking, mere inadequacy of consideration alone will not void contract, and inadequacy of price is no ground for rescission of contract of sale, unless it is so gross as combined with other circumstances to amount to fraud. However, these principles of law are not controlling if, as in instant case, issues involved affect creditor attacking deed executed by the debtor to third person, on ground of fraud. First Nat'l Bank v. Kelly, 190 Ga. 603, 10 S.E.2d 66 (1940).
O.C.G.A.
§ 13-3-56 inapplicable in determining damages if inadequacy of consideration not pleaded. - When, in an action for damages for the breach of a contract, there was nothing in the plea filed by the defendants with reference either to fraud or inadequacy of consideration, the law was not applicable in determining the amount of damages which should be awarded to the plaintiff. Pitcher & Manda v. Lowe, 95 Ga. 423, 22 S.E. 678 (1895).
Inadequate consideration did not prove partial failure of consideration.
- Trial court properly granted summary judgment to the appellee on the appellee's suit to recover on a promissory note executed by the appellant because the appellant could not show a partial failure of consideration when there was no consideration wholly valueless as to any part of the promissory note but, instead, as alleged by the appellant, the consideration was simply inadequate in point of actual total value to the note. Hall v. Prosero, Inc., 333 Ga. App. 454, 774 S.E.2d 216 (2015).
Cited in Hardin v. Baynes, 198 Ga. 683, 32 S.E.2d 384 (1944); Littlegreen v. Gardner, 208 Ga. 523, 67 S.E.2d 713 (1951); Childers v. Ackerman Constr. Co., 211 Ga. 350, 86 S.E.2d 227 (1955); Titshaw v. Carnes, 224 Ga. 57, 159 S.E.2d 420 (1968); Wellcraft Mfg., Inc. v. Troutman, 123 Ga. App. 321, 180 S.E.2d 588 (1971); Horner v. Savannah Valley Enterprises, Inc., 234 Ga. 371, 216 S.E.2d 113 (1975); Ford Motor Credit Co. v. Moulder, 137 Ga. App. 527, 224 S.E.2d 435 (1976); Graham v. Cook, 179 Ga. App. 603, 347 S.E.2d 623 (1986); Garbutt v. Southern Clays, Inc., 894 F. Supp. 456 (M.D. Ga. 1995).
RESEARCH REFERENCES
Am. Jur. 2d.
- 17 Am. Jur. 2d, Contracts, §§ 98. 27 Am. Jur. 2d, Equity, § 20. 77 Am. Jur. 2d, Vendor and Purchaser, § 21.
C.J.S.- 17 C.J.S., Contracts, §§ 154, 188. 17A C.J.S., Contracts, § 419.
ALR.- Construction and effect of "changed conditions" clause in public works or construction contract with state or its subdivision, 56 A.L.R.4th 1042.
Enforceability of sale-of-business agreement not to compete against nonsigner or nonowning signer, 60 A.L.R.4th 294.