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Baehr v. Penn-O-Tex Oil Corp. - 258 Minn. 533, 104 N.W.2d 661 (1960)

Rule:

The test that has been developed by the common law for determining the enforceability of promises is the doctrine of consideration. This is a crude and not altogether successful attempt to generalize the conditions under which promises will be legally enforced. Consideration requires that a contractual promise be the product of a bargain. However, in this usage, "bargain" does not mean an exchange of things of equivalent, or any, value. It means a negotiation resulting in the voluntary assumption of an obligation by one party upon condition of an act or forbearance by the other. Consideration thus insures that the promise enforced as a contract is not accidental, casual, or gratuitous, but has been uttered intentionally as the result of some deliberation, manifested by reciprocal bargaining or negotiation. In this view, the requirement of consideration is no mere technicality, historical anachronism, or arbitrary formality. It is an attempt to be reasonable in deciding which promises constitute contracts. 

Facts:

Plaintiff lessor appealed an order from the Hennepin County District Court (Minnesota) granting defendant oil company's motion for judgment notwithstanding the verdict (JNOV) in the lessor's action to recover rents allegedly owed because of possession and contract.


Plaintiff lessor leased gas stations to a lessee doing business as the oil company he was buying. The lessee could not meet payments due to the oil company and assigned accounts receivable, including those involving the lessor's gas stations. The oil company installed its agent in the lessee's office and collected rents paid by the filing station operators. The district court granted defendant oil company's motion for judgment notwithstanding the verdict (JNOV) in the lessor's action to recover rents allegedly owed because of possession and contract. On appeal, the court affirmed, finding neither possession nor a contract.

Issue:

Was there a legally enforceable contract between the parties?

Answer:

No.

Conclusion:

The oil company's installation of the agent in the lessee's office to collect money due the lessee and assigned to the oil company did not make it liable to pay the lessee's rent. The agent's promise to the lessor to pay rent was unenforceable because there was no consideration, and the promise did not amount to a contract. Evidence was insufficient to infer that the lessor's delay in filing suit was forbearance in consideration of assurance of payment.

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