However strongly a man may be bound in conscience to fulfill his engagements, the law does not recognize their sanctity or supply any means to compel their performance, except when founded upon a sufficient consideration. Past or executed consideration is a self-contradictory term. Consideration is something given in exchange for a promise or in a reliance upon the promise. Something which has been delivered before the promise is executed, and, therefore, made without reference to it, cannot properly be legal consideration.
Due to an economic downturn, former petroleum industry employees were placed on a retirement list and provided with one-half of their salary by semi-monthly checks. The letter confirming the plan was silent on the length of time the payments would last. The payments were discontinued and the former employees filed suit and alleged that there was a contract to provide the benefits for life.Evidence showed that the former employer took no formal action by way of meetings or actions of the board of directors that authorized the payments for life. The District Court dismissed the former employee's suit for want of equity.
Was there any consideration for a contract to pay the former employees pension for life?
The court held that assuming the former employees were told the payments were for life, there was not sufficient consideration to support the promise. The court held that the past services afforded the former employer did not provide sufficient consideration. The court also held that the former employer did not ratify any promises by local plant managers to make the benefits payable for life.