Washington Contract Law and Sham Consideration
Under Washington contract law, may consideration to establish an enforceable contract be based upon an agreement to do that which one is already obliged to do? Here’s my point of view (NOTE: please read our DISCLAIMER before proceeding).
WASHINGTON LAW OF CONSIDERATION
Generally, the issue of whether a contract is supported by consideration is a question of law. Nationwide Mut. Fire Ins. Co. v. Watson, 120 Wn.2d 178, 840 P.2d 851 (1992). And every contract must be supported by a consideration to be enforceable. Huberdeau v. Desmarais, 79 Wn.2d 432, 439-40, 486 P.2d 1074 (1971) (internal citations and quotation marks omitted).
Consideration may consist of an act, a forbearance, the creation, modification or destruction of a legal relationship, or a return promise given in exchange. Id. at 439 (internal citations and quotation marks omitted).
Overall, there is consideration if the promisee, in return for the promise, does anything legal which he is not bound to do, or refrains from doing anything which he has a right to do. Browning v. Johnson, 70 Wn.2d 145, 149, 422 P.2d 314 (1967) (internal quotation marks and citations omitted).
However, an agreement to do that which one is already obliged to do does not constitute consideration to support a contract. Boardman v. Dorsett, 38 Wn.App. 338, 341, 685 P.2d 615 (Div. 3 1984) (internal citations and quotation marks omitted).
A gratuitous promise, even if reduced to a writing, remains unenforceable. Huberdeau, 79 Wn.2d 432.
According to the Restatement of Contracts, the surrender of an invalid claim by one who has neither an honest nor a reasonable belief in the validity of the claim will not constitute consideration. Id. at 439 (internal citations omitted).
Importantly, the policy behind the requirement that an enforceable contract be supported by consideration has its roots in the common-law idea that one ought not be held to his gratuitous promises. Id. at 440 (internal citations and quotation marks omitted).
EXAMPLE: HUBERDEAU v. DESMARAIS
For example, in Huberdeau v. Desmarais; Huberdeau, a real estate seller, contracted for the sale of his land to Desmarais, a farmer. After the parties executed a contract for sale, the farmer was spontaneously granted by the U.S. Department of Agriculture a personal Hop Growing License–not attached to the land–authorizing the farmer to grow and sell a certain amount of hops.
Subsequently, the seller required the then financially distressed farmer to sign a writing in which the farmer agreed that the Hop Growing License (an unalienable personal right) would be considered part of the land and the new writing would be part of their previous real estate contract in the event of breach by the farmer.
The Supreme Court held that the seller gave and the farmer received no new, different or additional consideration in support of the new writing, that the promise to transfer the Hop Growing License was gratuitous and unsupported by consideration, and that therefore the promise was unenforceable. Id., 79 Wn.2d 432.
If you would like to learn more, then consider contacting an experienced Washington State Contract Attorney as soon as possible to discuss your case. Please note: the information contained in this article is not offered as legal advice and will not form an attorney-client relationship with either this author or Williams Law Group, PS; please see our DISCLAIMER.