Definition
Failure of consideration is a contract law doctrine describing a situation in which consideration that was bargained for and expected to support a contract either never materializes or, having initially existed, subsequently ceases or becomes worthless. It operates as a defense to enforcement of a contract or as a basis for rescission, restitution, or discharge.
Two distinct scenarios are covered by the term:
1. Want of consideration: The contract lacked sufficient consideration from the outset. The promised exchange was never legally adequate to support a binding obligation.
2. Failure of consideration (in the narrower sense): Valid consideration existed when the contract was formed, but the other party failed to perform or the promised performance became impossible, rendering the exchange incomplete or valueless. This is the more common modern usage of the phrase.
Failure of consideration may be total (the entire consideration fails, entitling the non-breaching party to treat the contract as discharged and seek full restitution) or partial (only a portion of the consideration fails, which may reduce obligations or support a proportional damages claim but does not necessarily void the entire agreement).
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Common Language
Wiktionary: "consideration" — careful thought, deliberation; the act of thinking carefully about something before making a decision.
Webster's 1913: "consideration" — the act of considering; mental view; regard; importance; compensation; something given or done as an equivalent or recompense.
The gap between ordinary and legal meaning here is significant. In common usage, "consideration" suggests thoughtfulness or importance; in contract law, it is a term of art meaning the bargained-for exchange — something of legal value given or promised in exchange for a promise. "Failure of consideration" therefore has nothing to do with insufficient deliberation or carelessness, but with a defect in the exchange itself. A researcher unfamiliar with contract law vocabulary who encounters this phrase in historical documents may misread it as a criticism of the parties' judgment rather than a legal defect in the transaction.
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Common Confusion
Failure of consideration is frequently confused with lack of consideration (also called want of consideration) and with total breach. These are related but distinct:
- Lack of consideration means no valid consideration was present from formation. The contract was void or unenforceable from the start.
- Failure of consideration means consideration existed at formation but was not delivered or became worthless. The contract was initially valid but performance broke down.
- Total breach is a remedies concept focusing on the non-breaching party's election to treat the contract as terminated; failure of consideration is often the underlying reason that election is available, but the two terms are not interchangeable.
Historical sources, including older editions of Black's, sometimes used "want of consideration" and "failure of consideration" interchangeably, which can mislead researchers working with pre-twentieth-century contracts materials.
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Recognized Forms
/SUBTYPES
Total failure of consideration: The consideration promised has entirely failed, supporting a claim for rescission and full restitution. The non-breaching party is generally restored to the position they occupied before contracting.
Partial failure of consideration: Only part of the promised consideration has failed. Courts vary on whether partial failure supports rescission or only an offset or proportional remedy.
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Why It Matters in Research
Researchers face two major traps with this term in historical sources.
First, the terminological instability between "want of consideration" and "failure of consideration" in older authorities. Nineteenth-century courts and treatise writers did not consistently distinguish the two. Bouvier's, for instance, simply redirects to the general CONSIDERATION entry without drawing the want/failure distinction at all. Black's early editions blur the line by treating both as aspects of a single concept. Modern courts and the Restatement (Second) of Contracts draw the distinction carefully, so projecting modern usage backward onto historical cases produces errors.
Second, the partial/total failure distinction carries significant procedural consequences that shifted considerably over time. In older common law, courts were reluctant to allow partial failure of consideration as a defense; equity was often the only forum willing to grant relief short of full rescission. The merger of law and equity in American courts during the nineteenth and twentieth centuries changed how and where this doctrine was litigated. Researchers working with pre-merger records should be attentive to whether a case arose in a court of law or equity, as this determines what remedy was available and how the doctrine was articulated.
The term also appears in contexts beyond bilateral executory contracts — particularly in negotiable instruments law, where failure of consideration is a personal defense (available against the original parties) but not a real defense (not available against a holder in due course). This instruments-law usage requires researchers to distinguish the general contracts doctrine from its narrower application under commercial paper rules.
Finally, this term has meaningful connections to restitution and unjust enrichment doctrine, which developed partly as a response to situations where consideration failed but a remedy at law was unavailable. Researchers tracing the development of restitution as an independent cause of action should use failure of consideration as a key access point.
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Historical Dictionary Support
Black's entry is skeletal: it defines the concept as "the want or failure of a consideration sufficient to support a note, contract, or conveyance," notes it may be partial or entire, and stops there. The compression is notable — Black's treats want and failure as a unified category rather than distinguishing them, which reflects the looser usage prevalent when early editions were compiled. The instrument-specific reference (note, contract, conveyance) is a useful signal that the term was primarily litigated in contexts involving written obligations and property transfers.
Bouvier's offers no independent entry, simply cross-referencing CONSIDERATION. This is common for derivative doctrinal terms in Bouvier's, but it means the researcher must read the parent entry in full to reconstruct the doctrine — a significant inconvenience given how much doctrinal content Bouvier's embeds in the CONSIDERATION discussion.
Neither dictionary addresses the equity/law forum distinction or the negotiable instruments application in any usable way. Both are silent on the partial/total distinction as a remedial choice. Modern treatises — particularly Corbin on Contracts and the Restatement (Second) materials — provide considerably more analytical structure than the historical dictionaries on this term.
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Jurisdictional Note
Most American jurisdictions recognize both total and partial failure of consideration as grounds for defense or remedy, but the consequences of partial failure vary. Some courts treat partial failure as supporting rescission only where the defect goes to the essence of the contract; others allow proportional damages or setoff. Civil law jurisdictions use different doctrinal vocabulary (causse, contreprestation) but reach functionally similar outcomes in many cases. Researchers working in mixed-jurisdiction contexts should not assume common law failure of consideration doctrine maps cleanly onto civil law equivalents.
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Encyclopedia Cross-Reference
Contracts — Adequacy of Consideration and Nominal Consideration (The Law Mind Contracts & Commercial Law Encyclopedia)
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