Legal Definitions - total failure of consideration

Total failure of consideration refers to a situation in contract law where one party to an agreement receives absolutely nothing of the value or benefit they were promised in exchange for their own promise or performance. In a contract, "consideration" is the essential element of value that each party gives up or promises to give up to make the agreement legally binding – it's the "bargained-for exchange."

When there is a total failure of consideration, the expected exchange completely falls apart, meaning the party who gave something (like money or a service) gets nothing in return that was part of the original agreement. This is distinct from a partial failure or a minor breach, as it signifies a complete absence of the promised benefit, potentially excusing the aggrieved party from their own contractual obligations or allowing them to seek a refund.

• Example 1: Unperformed Service

  A homeowner hires a contractor to completely remodel their kitchen, paying a significant upfront deposit for materials and initial labor. The contractor accepts the payment but never orders any materials, never shows up to begin work, and becomes unreachable. The homeowner received absolutely no remodeling services or materials for their payment.

  This illustrates total failure of consideration because the homeowner paid for a service and materials but received absolutely nothing in return. The contractor completely failed to provide any part of the promised kitchen remodel.

• Example 2: Undelivered Goods

  A small business owner orders a specialized piece of manufacturing equipment from a supplier, paying the full purchase price upfront. The supplier confirms the order and payment but never ships the equipment, nor any other item, and provides no explanation for the non-delivery.

  Here, there is a total failure of consideration because the business owner paid for specific equipment but received no goods whatsoever from the supplier. The bargained-for item was entirely absent.

• Example 3: Unusable Property Rental

  A family pays a deposit and the first month's rent to secure a vacation rental home for a specific week. Upon arrival, they discover the property is still under construction, completely uninhabitable, and the owner cannot provide an alternative. They are unable to stay at the property they paid for.

  This is a total failure of consideration because the family paid for the use and enjoyment of a vacation home but received absolutely no access or ability to use the property as promised. The value they expected to receive (a habitable rental) was entirely absent.