Passante v. McWilliam

53 Cal. App. 4th 1240, 62 Cal. Rptr. 2d 298 (1997)

 

RULE:

An enforceable contract requires only a promise capable of being enforced and consideration to support the promise. Consideration must also be given in exchange for the promise. Past consideration cannot support a contract.

FACTS:


Plaintiff attorney represented defendants, company and board members, as their corporate counsel. The company could not raise the necessary capital to begin its business. Plaintiff's law partner offered to make a loan of $ 100,000 for that purpose. The grateful company decided to give 3 percent of its stock to plaintiff for his help. Later, the company reneged on its gift and plaintiff sued to collect. A jury awarded plaintiff $ 33 million, which was the value of the promised stock. The trial court, however, entered judgment notwithstanding the verdict for defendants, finding that plaintiff was not entitled to the award because he violated his ethical duty to his clients by not advising them when they made the offer of the gift to consult with another lawyer. The court affirmed the trial court's judgment.

ISSUE:

Was the promise of 3 percent of the stock an enforceable reward contract?

ANSWER:

No.

CONCLUSION:

If the promise were bargained for by plaintiff, it was obtained unethically, and if it were not bargained for, it was an unenforceable promise. Because plaintiff had not bargained for the three percent ownership in defendant company, there was no enforceable contract, and that a gratuitous offer unsupported by delivery, was morally enforceable, but not legally enforceable.

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