Value (law)
Encyclopedia
Value within the context of law, particularly with respect to contracts, is a concept closely related, but not identical, to that of consideration
.
At common law
, certain transferrable obligations were only enforceable if the transferee had acquired them for value. Under the rules of equity, the rights of a bona fide purchaser for value would not be interfered with. State courts of various jurisdictions in the US adopted varying definitions of what constituted "value".
Under the Uniform Commercial Code
, except with respect to Article 3, a person gives value for rights if he acquires them in exchange for:
Under Article 3 of the Code, a negotiable instrument
is transferred for value if the transferee receives in exchange:
The setting forth in express terms of what is "value" in the context of commercial transactions was a bold step forward by the drafters of the UCC, since the jurisdictional distinctions as to value made certain transactions valid in one state and invalid in another.
Consideration
Consideration is the central concept in the common law of contracts and is required, in most cases, for a contract to be enforceable. Consideration is the price one pays for another's promise. It can take a number of forms: money, property, a promise, the doing of an act, or even refraining from...
.
At common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
, certain transferrable obligations were only enforceable if the transferee had acquired them for value. Under the rules of equity, the rights of a bona fide purchaser for value would not be interfered with. State courts of various jurisdictions in the US adopted varying definitions of what constituted "value".
Under the Uniform Commercial Code
Uniform Commercial Code
The Uniform Commercial Code , first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.The goal of harmonizing state law is...
, except with respect to Article 3, a person gives value for rights if he acquires them in exchange for:
- a binding commitment to extend credit or for the extension of immediately available credit;
- as security for or in total or partial satisfaction of a preexisting claim;
- accepting delivery pursuant to a preexisting contract for purchase;
- generally, any consideration sufficient to support a simple contract.
Under Article 3 of the Code, a negotiable instrument
Negotiable instrument
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. According to the Section 13 of the Negotiable Instruments Act, 1881 in India, a negotiable instrument means a promissory note, bill of exchange or cheque payable either...
is transferred for value if the transferee receives in exchange:
- a promise of performance, to the extent the promise has been performed;
- a security interest or other lien in the instrument other than a lien obtained by judicial proceeding;
- the total or partial discharge of an antecedent claim against any person, whether the claim is due;
- another negotiable instrument; or
- an irrevocable obligation to a third party by the person taking the instrument.
The setting forth in express terms of what is "value" in the context of commercial transactions was a bold step forward by the drafters of the UCC, since the jurisdictional distinctions as to value made certain transactions valid in one state and invalid in another.