Robbins: How about a little consideration?!
It’s not that I’ve been slighted. In fact, far from it.
Here in Happy Valley, despite COVID-19, social unrest, rudderless national political leadership, uncontained wildfires, the coming attraction of murder hornets, economic malaise, and the year 2020 in general, I think most of us are treated pretty well.
Even with their face masks on, people hold doors open for one another. “Please” and “thank you” ring common in the mountain air, and people generally help one another out. I remember when we first moved here — before the days of roundabouts — telling my mother in California that the traffic in the Vail Valley was terrible. “People are so darn considerate,” I told her, “that everyone waives everyone else through at the four-way stops and no one will go!”
In the overall scope of things, I have no complaints.
But that isn’t what I’m talking about. And if you think about it, all of us being considerate to one another wouldn’t bake up much of a legal column.
So what I am talking about — admittedly in a sorta round-about way — is another kind of consideration, the legal kind. That’s the meal we’re here to sink our teeth into.
So, what exactly is consideration?
In lay terms, it has a couple of accepted meanings. First, it may be an analog of contemplation. “I gave that deep and meaningful consideration before I decided no.” Or it can suggest thoughtful and sympathetic regard. “She was profoundly considerate of the needs of others.”
In law, though, it is different. In law, the term consideration is transactional.
What it means, at law, can be the recompense of payment. “I paid the consideration charged for his services.” Or it can mean the inducement to a contract or other legal transaction, specifically, an act or forbearance or the promise thereof done or given by one party in return for the act or promise of another. Before employing this second meaning in a sentence, let’s first expand on it a little.
Consideration contemplates exchanging one thing of value for another. In most circumstances, it is a requisite to bind two parties to a contract. I give you something of value in exchange for something else of value. A simple example would be Mr. A — let’s call him Fred — is selling his car to Mr. B. — let’s call him Barney. In order for the contract to be binding, there must be consideration. Barney must exchange something of value — it this case his hard-earned skrilla — for something else of value — in this case, ol’ Fred’s car. Consideration is exchanged when Barney’s cash is handed over in exchange for ol’ Fred’s wheels.
Let’s now float the concept of consideration out in a sentence. “Barney paid Fred fair consideration for his luxe green-and-white 1956 Ford Fairlane.”
Now, while you might not be a fan of boxy, 50-year-old cars, so long as value was exchanged, the requirement of there being consideration has been met.
A story about a cow
But then there’s this.
First, there is Rose of Aberlone. I don’t blame you in the name does not ring familiar. Unless you are a lawyer who sat through Contacts in 1L, it is unlikely that you would. You see, Rose was a cow. A barren one, in fact.
In 1886, one C. Sherwood, president of Plymouth National Bank, contracted with one Hiram Walker (yes, that Hiram Walker) of Walkerville, Ontario, for the purchase of a cow. As history has it, the cow’s name was Rose of Aberlone. Both Mr. Sherwood and Mr. Walker believed that Rose was barren and would not breed. That mistake led to one of the most famous contract cases in U.S. history.
Mr. Sherwood tried to pay Mr. Walker the agreed-upon price of $80, but Mr. Walker refused it after discovering that Rose was pregnant. Her value was now ten times greater than that agreed to by the parties. Mr. Sherwood sued to take possession of Rose at the original price.
In 1887, the Michigan Supreme Court declared in Sherwood v Walker that, because a mutual mistake affecting the substance of the transaction had been made, Hiram Walker had the right to rescind the contract and to keep the cow. Rose of Aberlone was his to do with as he pleased. I’m not saying what that was but, hey, the cow was his.
Even though consideration was paid, because of the mutual mistake, it was not adequate and, accordingly, it did not bind them.
Then there’s this other nasty bit; not in every circumstance must consideration be paid. Gifts are an exception but is not a rabbit hole we will chase down here. So too are charitable pledges. In short, in the nonprofit world, the promise of a gift is enough to bind. The heavenly glow of doing good and right by the world is considered to be its own reward and the exchange of value for value may not be required.
In fact, the opposite may in some ways be true. Say, for example, I buy a yacht (dream on!) being auctioned by a nonprofit organization. Check with your accountant, but the value of the yacht itself may not earn a tax deduction; only the excess value paid, if any may be deductible. While there certainly would be a consideration in this instance — I pay the nonprofit for the yacht — what may not be considerate is that I may be dinged with taxes I had hoped to avoid.
C’est la vie, I ‘spose.
Summing up, in legal terms, “consideration” is most times an essential of a binding contract. I scratch your back and, in return, you quell the itch on mine. In fact, consideration is the very essence of the bargain.