2949 Inc. v. McCorkle - No. 54850-6-I, 2005 Wash. App. LEXIS 1167 (Ct. App. May 23, 2005)

Rule:

The promise not to revoke in an option contract must be supported by consideration, even if that consideration is nominal. And while courts are moving toward liberalizing the consideration requirement in option contracts, most courts still require a benefit to the promisor or a detriment to the promisee. Options typically benefit the one qualified to exercise the option, known as the optionee. If the optionee stands to make a substantial gain by exercising the option and the optionor must stand by idly awaiting the decision, it is appropriate that the optionee pay for the privilege.

Facts:

Appellants Taletha and Terry McCorkle signed a contract to lease a sign from Respondent 2949, Inc. However, appellants revoked their offer before receiving notice that respondent accepted the same. Respondent then sued appellants for breach of contract and the trial court entered summary judgment against appellants. On appeal, appellants argued that the contract's irrevocability clause was unenforceable because there was no consideration for it.

Issue:

Was the irrevocability clause enforceable, thereby making the appellants liable for breach of contract? 

Answer:

No.

Conclusion:

The appellate court initially noted that there was no new consideration for the irrevocability clause or that the respondent had bargained for the irrevocability clause; therefore, because insufficient consideration supported the option, the irrevocability clause was unenforceable. The appellate court held that because there was no separate signature, the clause was also not enforceable under Wash. Rev. Code § 62A.2A-205. The appellate court concluded that the appellants should not have reasonably expected their offer to induce the respondent to substantially act, nor was validating an otherwise invalid irrevocability clause necessary to avoid injustice; thus, no genuine issue of material fact supported the respondent’s detrimental reliance argument.