Holding Court: Consider This

Holding Court is a series by retired Rye City Court Judge Joe Latwin. Latwin retired from the court in December 2022 after thirteen years of service to the City.

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By Joe Latwin

To establish a claim for a breach of contract, there must be a contract between the parties, performance by the plaintiff, a failure off performance by the defendant and damages. A contract requires at least two parties with legal capacity (not minors or incompetents, etc.), mutual assent, called a “meeting of the minds”, to the terms of the agreement (often an offer and acceptance of that offer), and consideration. To establish the existence of an enforceable agreement, there must be consideration.

Consideration consists of either a benefit to the promisor or a detriment to the promisee. To be consideration, 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. Absent fraud, the courts will not inquire into the adequacy of the consideration for an agreement for that would require the court to substitute its valuation of the consideration for that of the parties, impeding the rights of people to freely enter into contracts.

Most contracts are not written. Think of walking up to the clerk’s window at the train station. You say “Grand Central”. The clerk says the price and you swipe your credit card.  There is no written contract. We do thousand of these oral agreements without blinking, but sometimes it gets more complicated. Sometimes, the law requires certain contracts to be in writing. The Statute of Frauds requires certain contracts: (1) that by their terms are not to be performed within one year; (2) to answer for the debt, default or miscarriage of another person; (3) are made in consideration of marriage; (4) promise to pay a debt discharged in bankruptcy; (5) to assign a life or health or accident insurance policy, or to name a beneficiary of any such policy; & (6) for brokering loan or real estate or interest  transaction, must be in writing and signed by the party to be charged.

There is an oft quoted saying “An oral contract is worth the paper it is written on.” But what do you do with a written agreement where no consideration is written in the contract? In a recent case, the written he contract contained no express consideration, nor are there any mutual promises of the parties to it from which such consideration can be fairly inferred.    Is it enforceable?

The Appellate Division for the Second Department (that covers Westchester, Rockland, Brooklyn, Queens, and Long Island) recently upheld the dismissal of a breach of contract case where the written contract did not describe the consideration for the agreement. The simple solution is to make sure a written contract specifies what you intend to receive and what you intend to do.