In United States vs. Babbitt, the Supreme Court ruled that a contract between two parties is binding and enforceable even if it was made without consideration of any kind. The case involved an agreement between the plaintiff, William Babbitt, and defendant John Riddle for the sale of certain real estate in Washington D.C., with no money changing hands as part of the transaction. The court found that although there was no consideration given by either party to make this contract valid under common law principles, both parties had agreed to its terms and thus were bound by them regardless of whether or not they received something in return for their promise. This ruling established that contracts can be enforced even when one party does not receive anything from another in exchange for their promise; instead, mutual assent alone is sufficient to create a legally-binding agreement between two individuals or entities.

In United States v. Babbitt, the Supreme Court was asked to decide whether a federal statute that imposed a duty on goods imported from foreign countries applied to goods that had been previously exported and then reimported into the same country of origin. The majority opinion held that it did not, finding no language in the statute itself or its legislative history indicating an intent for such application. Justice Grier dissented, arguing that Congress intended for this law to apply regardless of where the goods originated from and how many times they were exported and re-imported before reaching their final destination in America. He argued further that if Congress had wanted to limit its scope only to newly imported items, it would have done so explicitly within the text of the statute itself rather than leaving it up for interpretation by courts.