Friday, April 22, 2016

Cousin shafts cousin

This case resonates with me because it involves an elementary contract issue that I dealt with as a first-year law student in one of our first role-playing exercises: past consideration to support a contract. The case is also interesting because it betrays a shocking failure to live up to a promise that would have netted someone a lot of money. And it involves people who are related to each other.

The case is Greenberg v. Greenberg, a summary order decided on April 15. One of the first things you learn in Contracts 101 is that a contract is not enforceable in court unless you have offer, acceptance and consideration. Consideration is another way of saying "bargained-for exchange." So if Arthur wants Frankie to paint his house, Arthur offer Frankie $3,000. That offer will induce Frankie to say yes. The $3,000 is consideration. We normally think of consideration as a present-tense event: the parties discuss offer and acceptance and consideration at the same time

But the law in New York also recognizes you can have a contract based on past consideration, but in limited circumstances. The contract must be in writing, and the past consideration must have been performed or given. "The recitation of consideration must not be vague or imprecise."

Having gotten the boring stuff out of the way, let's take a look at how this plays out in real life. Derrick Greenberg was badly hurt in an accident and had a lawsuit against someone. He promised to give cousin Marshall Greenburg $200,000 if that case settled. This was payback for Marshall's having given Derrick "many gifts and many loans" in the past. They put this in writing. They wrote: "This is a legal written document, agreement and/or contract that cannot be broken and or terminated by anyone including immediate family."

Is there any doubt that Marshall and Derrick agreed to this "contract"? They even stipulated that the agreement was in fact a contract and could not be breached in any way. Yet, the Court of Appeals says it is unenforceable. How did the case reach the Court of Appeals? Derrick decided not to give Marshall the money, for whatever reason. Marhsall wants the money. He will not get it. The Court of Appeals (Pooler, Livingston and Lohier) says that the agreement does not satisfy the strict rules governing past-consideration contracts because "the past consideration in the contract was not sufficiently expressed to fall within the confines" of New York law.

There was once a time in the distant past when Marshall and Derrick got along and were friendly and acted like loving cousins who looked out for each other. Marshall apparently looked out for Derrick over the years. Marshall was counting on that money. He thought the contract was worth the paper it was printed on. It was not.

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