A legally enforceable obligation, which has been in existence prior to the time in question, to reimburse another with money or property.
Principles of contract law vary from jurisdiction to jurisdiction regarding whether an antecedent debt constitutes good consideration since the debtor does not incur any new detriment at the time that he or she enters a contract with another party. COMMERCIAL PAPER that has been given in exchange for an antecedent debt is deemed by the UNIFORM COMMERCIAL CODE to be supported by adequate consideration.
Under statutes governing BANKRUPTCY, a transfer of property made by a debtor because of an antecedent debt might be considered a VOIDABLE preference, depending upon the length of time between the creation of the debt and the filing of the petition for bankruptcy. A bankruptcy court may set aside a voidable preference since it gives one creditor a better right to payment than other creditors who are similarly situated.
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