The Twelfth Court of Appeals recently held that lack of consideration is an affirmative defense that must be plead.  In this case involving a will contest, the court reversed an order granting a no-evidence motion for summary judgment on the basis that the agreement at issue lacked consideration.  The court ruled that consideration for a written instrument is presumed.  The Court also held, however, that lack of consideration is an affirmative defense.  Thus, the court concluded, it was improper for a movant to utilize a no-evidence motion regarding a claim on which the movant has the burden of proof.  The court’s opinion in Burges v. Mosley can be found here

In my opinion, there is a problem with treating lack of consideration as an affirmative defense.

Here is a list of propositions with which I have no disagreement:

  • existence of a valid and enforceable agreement is an element of a claim for breach of contract;
  • consideration is an essential element of a valid and enforceable agreement;
  • plaintiff has the burden to prove all of the elements of his claim;
  • in order to allege lack of consideration with respect to a written instrument, a defendant must file a verified denial under TRCP 93(9);
  • failure of consideration occurs after a contract is formed and is an affirmative defense under TRCP 94;
  • an affirmative defense is a matter of confession and avoidance, i.e., it does not seek to defend by denying the plaintiff’s claims, but seeks to establish an independent reason why the plaintiff cannot recover

Thus, courts err by placing the burden on defendants to prove lack of consideration simply because the agreement is in writing.  While consideration is presumed for a written instrument, the presumption should not survive a verified denial.  Further, based on the foregoing propositions, lack of consideration should not be considered an affirmative defense.  It is true that the Texas Supreme Court said otherwise in Lakeway Co. v. Leon Howard, Inc., 585 S.W.2d 660, 662 (Tex. 1979).  But the only authority cited for this proposition is TRCP 94, which lists failure of consideration as an affirmative defense, which is in keeping with the nature of defenses as matters in confession and avoidance.  The difference between lack of consideration and failure of consideration is significant and was discussed in a previous post here.  While TRCP 93(9) requires a verified denial for lack of consideration and failure of consideration for written instruments, only failure of consideration is an affirmative defense.  Suffice it to say that the defendant should not bear the burden of proving lack of consideration so long as a verified denial is filed regarding written agreements.  Accordingly, a defendant should be able to use a no-evidence motion for summary judgment to challenge the absence of a valid and enforceable agreement, including the element of consideration.  At some point, the Texas Supreme Court should take up this issue, overrule Lakeway Co., and resove this simple, though pervasive, misunderstanding.