Fair Consideration Law and Legal Definition

Fair consideration is a consideration given for property, in exchange for such property, as a fair equivalent therefor, and in good faith. It is given when property is conveyed or as an antecedent debt is satisfied. [Seligson v. New York Produce Exchange, 394 F. Supp. 125 (S.D.N.Y. 1975)].

The following is an example of a state statute (New York) referring to fair consideration:

NY CLS Dr & Cr § 272. Fair consideration is given for property, or obligation:

a. When in exchange for such property, or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or an antecedent debt is satisfied; or

b. When such property, or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared with the value of the property, or obligation obtained.