Occasion: Apfel (plaintiff) sold an idea to Prudential-Bache Securities Inc. for issuing municipal bonds electronically without physical certificates. Before this, bonds were issued by issuing paper certificates. Apfel sold the idea to PBS inc. and in return would receive a payment. PBS later refused to continue payments to Apfel and argued that the idea was already in the public domain and lacked novelty.

Legal Issue: Can consideration be sufficient even if it loses its value or novelty after contract formation?

Holding: The New York Court of Appeals held in favor of Apfel.

Reasoning: The court argued that even if the idea was public domain, PBS still benefited from its disclosure. PBS didn’t know about the idea and the disclosure of the idea and they profited and benefited off of acquiring the information and systems. Therefore, Prudential’s promise to pay was supported by consideration (the disclosure and use of the system).

Case File:

https://law.justia.com/cases/new-york/court-of-appeals/1993/81-n-y-2d-470-0.html