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Inequality Of Exchange

A.

An unequal exchange will not usually void a contract in an action at law, especially if the parties deal at arm’s length.

B.

Courts will deny equitable relief (i.e., specific performance) to protect a party that refuses to perform its part of a highly disproportionate exchange. (See Campbell Soup v. Wentz.)

C.

The adequacy of consideration is judged as of the time of the transaction. Example: In an arms-length agreement, A promises to sell ten law guides to B in exchange for $100. The goods are to be delivered and paid for in 30 days. To the surprise of both parties, the fair market value of law guides increases to $1,000 each by the date of the actual exchange. Although the consideration is vastly disproportionate at the time of the actual exchange, it was adequate at the time the contract was made.

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