Consideration

Consideration is anything of value promised to another when making a contract.

Consideration may be either a good consideration or a valuable consideration.  A good consideration is based either on love and affection toward one to whom a natural duty exists.  The term “valuable consideration” means that the grantor received something of value in return for his conveyance of the property, such as money or the satisfaction of a debt due by the grantor to the grantee.

If the conveyance is voluntary, consideration is not necessary.  However, consideration is an essential element in a case where the instrument is alleged to have been procured by fraud or undue influence, where the grantor did not have the mental capacity to enter into the transaction, or in a suit to set aside the transfer of expectancy or to reform the deed.  Therefore, a voluntary conveyance cannot be set aside merely on the ground of inadequacy of consideration.  Moreover, a grantor cannot cancel a deed for failure of consideration because a deed is valid and operative as between the parties and privies even if it is not based on consideration.

Even assuming that consideration is necessary to the validity of a deed, it is not essential that the consideration be recited.  In some jurisdictions, statutes authorize conveyance of land without recitation of consideration.  A consideration contrary to law or public policy is insufficient consideration to support a deed.  The deed is void if an illegal consideration is recited.

A deed of grant executed and delivered in proper form is supported by a presumption of good consideration.  The acknowledgment of the receipt of consideration in a deed is prima facie evidence of that fact.  When the consideration for a deed is in question, the burden of proving want of consideration for a deed of grant is upon the party who seeks to avoid it.

If the consideration clause is itself a part of the contract, and not merely a receipt, the general rule as to the inadmissibility of evidence to vary or contradict a written contract prevails.  However, when the recital of consideration in a deed is a mere receipt, parol or extrinsic evidence is admissible to modify, explain, or contradict it.

A consideration duly acknowledged in a deed cannot be contradicted by parol evidence for the purpose of destroying the legal effect of the deed as a conveyance.  Moreover, the recital of a money consideration in a deed cannot be contradicted by parol evidence showing that the consideration was not to be paid.


Inside Consideration