Failure of Consideration

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Failure of Consideration

As applied to contracts, this term does not necessarily mean a want of consideration, but implies that a consideration, originally existing and good, has since become worthless or has ceased to exist or been extinguished, partially or entirely. It means that sufficient consideration was contemplated by the parties at the time the contract was entered into, but either on account of some innate defect in the thing to be given, or nonperformance in whole or in part of that which the promisee agreed to do, nothing of value can be or is received by the promisee.

failure of consideration

n. not delivering goods or services when promised in a contract. When goods a party had bargained for have become damaged or worthless, failure of consideration (to deliver promised goods) makes the expectant recipient justified to withhold payment, demand performance or take legal action. (See: consideration, contract)

References in periodicals archive ?
He said approximately 34 million shares of stock currently are outstanding, with more than 11 million subject to cancellation and return to authorized shares due to failure of consideration dating from transactions associated with California's abandoned efforts at electric deregulation.
Shareholders Litigation, holding that corporate directors who administer a stockholder-approved director stock option plan are entitled to the protection of the business judgment rule, absent corporate waste or a total failure of consideration, which would be unlikely to exist except in the most egregious of circumstances.
While not discussed in the opinion, it is not clear how this differs from the practice of boards setting their own cash compensation for board service, which, like the plan in Seinfeld, is generally subject entirely to the discretion of the board, absent corporate waste or a total failure of consideration.

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