inadequate consideration

inadequate consideration

Mere inadequacy of consideration, as opposed to nominal consideration will not void a contract. [Batsakis v Demotsis].

Inadequate consideration is more likely valid where the other side's performance carries more uncertainty or risk. [Batsakis v Demotsis] (loan of $20 in exchange for $750 with interest in WWII Greece) Likewise, consideration is not void because it reflects a risk-loving attitude or high discount rate. [Embola v Tuppela] (contract to give $50 in return for later chance at $10K from recovered gold mine valid). Conversely, inadequate consideration is less likely to create a binding contract where grossly unequal "fixed" values, such as discrete sums of money, are exchanged. [Schnell v Nell] (promise to pay $600 in exchange for one cent).

However, note that inadequate consideration may render a contract unconscionable and thus uneforceable, either by itself, Marks v Gates, or with procedural defects in bargaining Waters v Min Ltd

[alias: adequate consideration]