Intro to Consideration Contracts – Prof. Merges Jan. 13, 2011

NY Court of Appeals

Judge Parker

Alton Brooks Parker, 1852–1926

Parker was Defeated by Theodore Roosevelt in 1904 Presidential Election

Hamer v. Sidway Procedural history

Hamer v. Sidway Who is Hamer? What is an Executor? “Mesne” assignments

Hamer v. Sidway Procedural history –Why did executor reject the claim?

Key facts –Wm E Story, Sr. – “Story Sr.” –Wm E Story 2 nd - “Young Will” –“The promise”

What was “The Deal”?

Uncle: $$ when nephew turns 21, if he has refrained Nephew: Refrain from smoking, gambling etc. The Deal

Promisor and Promisee What is a promisor? What is a promisee?

UncleNephew The Deal Uncle as “promisor”: what promise did he make?

Where does “consideration” fit in?

What is the uncle’s argument regarding consideration (¢)? –What happens to the contract, and the π’s lawsuit, if the court agrees with Uncle?

UncleNephew

UncleNephew “It is enough that something is promised, done, forborne, or suffered by the party to whom the promise is made AS CONSIDERATION FOR THE PROMISE MADE TO HIM [or her].” – p. 35.

Common statement Was the promisor’s promise supported by consideration?

PromisorPromisee

What if both parties make a promise?

Uncle: $$ Nephew: I promise to refrain from smoking, gambling etc. The Deal

Focus on “the controversial return promise” –The key promisee –Often, the party seeking to enforce the agreement –By symmetry, the one trying to get “off the hook” is the “key promisor”

What did Uncle (Story Sr.) Seek?

That Young Will refrain from some things...

What did Uncle (Story Sr.) Seek? “... If he would refrain from drinking liquor, using tobacco, swearing, and playing cards...”

What did Uncle (Story Sr.) Seek? “... If he would refrain from drinking liquor, using tobacco, swearing, and playing cards...” COMPARE: “If he would promise to refrain from drinking [etc.]...”

What difference does it make? Note 6, p. 39

PromisorPromisee What is the Uncle’s argument regarding consideration?

Historical roots Frederic William Maitland

Oliver Wendell Holmes Jr.

Benefit to promisor – required? It was in an action for debt at common law But not in NY or other common law jurisdictions Compare common law assumpsit: an undertaking...

What is the court’s response?

What was the consideration for the Uncle’s promise? How did court’s definition of detriment differ from that urged by defendant?

What is the court’s response? What was the consideration for the Uncle’s promise? How did court’s definition of detriment differ from that urged by defendant?  35

What is the court’s response? “Any... Forbearance of a right will be sufficient to sustain a promise...” Chancellor James Kent

Note 2 p. 37: Motive vs. “inducement” -- ?

§71. REQUIREMENT OF EXCHANGE (1) To constitute consideration, a performance or a return promise must be bargained for. (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

(3) The performance may consist of (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation. (4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

Fiege v. Boehm Who are the parties? Procedural history

The facts What actually happened What the court believed actually happened

Fiege: $$ for child support Boehm: refrain from filing charges The Deal

What is the consideration issue? Who raises it? What is the argument?

What is the consideration issue? Who raises it? What is the argument? –Fiege: No basis to her claim, to the bastardy charge

Who is the key promisee? What promise is the key promisee trying to enforce?

PromisorPromisee Fiege: There is nothing here to support my promise to pay!!

“The Rules” regarding settlement of claims and consideration P. 43 “Compromise of a doubtful claim”

Court’s holding Because Boehm believed in good faith that her charge of bastardy may have been valid, Fiege’s promise to pay was enforceable

“Objective” and “subjective” elements mm

Variations... What if Boehm KNEW Fiege was not the father? What if Boehm thought babies came from kissing? –“reasonable basis of support” – p. 37

“Objective” and “subjective” elements