“Good and Valuable Consideration”

The phrase good and valuable consideration is a standard feature of recitals of consideration in business contracts. You know the drill:

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

So I decided to revisit, after a long absence, the meaning of good and valuable consideration. Well, I had to dig deep. You won’t find discussion of it in the obvious U.S. contracts treatises or anywhere else in the literature on contracts.

The first place I found it was in Google Books, which offered me an 1834 edition of the English treatise Chitty on Contracts (with a more long-winded title). Here’s what it says:

We may premise, that considerations, as they relate to deeds, are in general divided into good and valuable considerations. “A good consideration,” says Blackstone (o), in speaking of a consideration for a deed or grant, “is such as that of blood, or of natural love and affection, when a man grants an estate to a near relation; being founded on motives of generosity, prudence, and natural duty. A valuable consideration is such as money, marriage (p), or the like, which the law esteems an equivalent given for the grant; and is therefore founded in motives of justice.” The former will not in general hold against creditors, if calculated to defraud them; the latter cannot in general be impeached (q). The distinction between a good and valuable consideration is this, — that a good consideration makes the instrument (a deed of conveyance, &c,) good as between the parties; but a valuable consideration makes the conveyance good against a subsequent purchaser (r). We must, however, observe, that the term good consideration, as thus applied to deeds, does not hold in relation to simple contracts, to support which relationship, natural love and affection will not be a sufficient consideration (g).

In the United States the distinction between good consideration and valuable consideration is evidently still relevant for some real-estate deeds, because it’s enshrined in, for example, Georgia statutes (more specifically, Ga. Code Ann. § 13-3-41). But the only reason I care about it is that I still see good and valuable consideration constantly in contracts, and it makes no sense.

Using the phrase good and valuable consideration is doubly stupid. First, consideration is what it is, and saying that it possesses a certain quality won’t do you any good unless it actually does. This from Farnsworth on Contracts 157 (3d ed. 2004):

[I]t is not within the drafter’s power to transform something that cannot be consideration into consideration by reciting that it is given “in consideration.”

And second, what was true in 1834 still holds true: the distinction between good consideration and valuable consideration is irrelevant for purposes of regular contracts, in other words contracts other than deeds and other formal contracts. (I leave it to others to determine whether it’s still relevant for those.) If buy 100 widgets from Jones in exchange for my undying affection, that transaction will be void for lack of consideration.

That good and valuable consideration is still a fixture in business contracts is a damning indictment of traditional contract drafting.

So here’s a little test. If you ask someone to draft a contract and what they prepare uses the phrase good and valuable consideration, ask them what it means. Here one good answer:

It means nothing, but in drafting the contract I used the best available precedent and assumed that you didn’t want me to start a big redrafting project.

Here’s another decent answer, although it’s a little less reassuring:

I don’t know what it means, but I do know that it doesn’t matter. Doing deals is about expediency, and I’m focusing on what needs doing to get the deal done.

If instead they look blankly at you, at least they’re being honest.

Conceivably they might start telling you about how using the phrase good and valuable consideration is required as a matter of consideration doctrine. That’s when you should get worried.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.