Consideration

Consideration is what induces parties to a contract to enter into an agreement.  Valuable consideration is a type of promised payment upon which a promisee can enforce a claim against an unwilling promisor.  There is a difference between valuable consideration and good consideration.  Good consideration may be the feeling of love and affection towards a relative.  For example: A promises to give B a piece of land on the condition that A marries B’s daughter C.  This is not a valuable consideration because the promise of giving land cannot be enforced for lack of valuable consideration.  The consideration here, ie; A marrying C, is only good consideration.

In an assignment, valuable consideration is considered  an essential element to support a promise to an assignment.  Thus, one of the factors determining the validity and justifiability of an assignment is the consideration for a transaction.  An agreement to transfer property will be enforceable as an equitable assignment only if supported by valuable consideration.[i]

However, all assignments without consideration are not invalid.  An assignment can be a product of contract or gift.  Valuable consideration only, supports the promise to the assignment.  An assignment without consideration is valid when:

  • there has been a delivery;
  • the assignment is in writing; or
  • the assignment is by way of gift

An assignment, other than a gift, requires a benefit or consideration to the assignor.  Gifts are valid without consideration or actual value paid in return.  However, there must be delivery of possession.[ii] Moreover, an assignment made without consideration is revocable, unless a writing or delivery of some item evidences its irrevocability.  However, an assignment made for consideration is irrevocable.[iii]

A consideration for an assignment need not appear on the face of the instrument.  A valuable consideration can be inferred from the terms of the agreement.  A consideration can also be implied.[iv]

[i] In re Estate of Musselman, 494 Pa. 571, 576 (Pa. 1981)

[ii] Harris v. Clark, 3 N.Y. 93 (N.Y. 1849)

[iii] F. H. Vahlsing, Inc. v. Hartford Fire Ins. Co., 108 S.W.2d 947, 951 (Tex. Civ. App. 1937; Brager v. Blum, 49 B.R. 626, 629 (E.D. Pa. 1985)

[iv] Abraham v. Abraham, 203 Neb. 384, 390 (Neb. 1979)


Inside Consideration