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 ?
The parties had agreed to the exchange and so Lord Shaw felt it looked like both failure of consideration and a condictio causa data causa non secuta.
In England, the case of Fibrosa Spolka Ackjyna v Fairbairn Lawson Combe Barbour LtdF also makes clear that consideration refers to performance, and therefore, in cases of termination of contracts for breach (or frustration on the facts of that case) (38) restitution is made via the unjust factor of failure of consideration. (39) However, as Evans-Jones has pointed out, the logic of the civilian system is that if the contract was valid when formed, the parties pay or perform to discharge a debt or other obligation.
(57) In English law, failure of consideration lies at common law in any case where counter-performance is not forthcoming.
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.
Edelman and Bant, for instance, warn their readers at the very beginning of their chapter on the subject that 'failure of consideration is intensely difficult--one of the most difficult and controversial of all the unjust factors'.
So far as the meaning of 'failure of consideration' is concerned, it is now generally agreed that 'failure of consideration' can be paraphrased as 'failure of basis'; (4) but to ask when, exactly, the basis of a transaction fails, is simply to put the question differently.
The unanswerable objection to applying failure of consideration to the facts of Lumbers is not that the unjust factor is confined to money claims, but that the basis on which Builders did its work was that it would be paid by Sons, not by the Lumbers.
A commentator writing recently in the Law Quarterly Review suggested that the High Court of Australia in Roxborough v Rothmans of Pall Mall Australia Ltd (1) had 'rejected the theory that "unjust enrichment" is the determinant of the restitutionary action for failure of consideration'.
If there is here a right to enforce repayment upon the basis of a failure of consideration, it is because, in the circumstances, the law imposes upon the respondent an obligation to make just restitution for a benefit derived at the expense of the appellants.
a legal failure of consideration that in effect sets aside the contract, it appears that no clause in the contract would be of much assistance to landlord.
The first was the principle that restitution will only be ordered for failure of consideration if the failure is total.
To the extent that the High Court recognised failure of consideration, however attenuated, as a ground of restitution for unjust enrichment, the decision supports that model.

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