Chapter 12
Consideration
Case 12.1
27 N.E. 256
(Cite as: 124 N.Y. 538, 27 N.E. 256)
HAMER
v.
SIDWAY
63. ‘In general a waiver of any legal right at the request of another party is a sufficient consideration for a promise.’ Pars. Cont.
*444. ‘Any damage, or suspension, or forbearance of a right will be sufficient to sustain a promise.’ 2 Kent, Comm. (12th Ed.) *465.
Pollock in his work on Contracts, (page 166,) after citing the definition given by the exchequer chamber, already quoted, *546 says:
‘The second branch of this judicial description is really the most important one. ‘Consideration’ means not so much that one party is
profiting as that the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an
inducement for the promise of the first.‘ Now, applying this rule to the facts before us, the promisee used tobacco, occasionally
amount to 600 guineas, of which your own admission will be the only evidence that I shall receive or require. Your affectionate
uncle, CHARLES SHADWELL.’ It was held that the promise was binding, and made upon good consideration. *547 In Lakota v.
Newton, (an unreported case in the superior court of Worcester, Mass.,) the complaint averred defendant’s promise that ‘if you
[meaning the plaintiff] will leave off drinking for a year I will give you $100,’ plaintiff’s assent thereto, performance of the condition
by him, and demanded judgment therefor. Defendant demurred, on the ground, among others, that the plaintiff’s declaration did not
promise.’ Abstinence from the use of intoxicating liquors was held to furnish a good consideration for a promissory note in Lindell v.
Rokes, 60 Mo. 249. The cases cited by the defendant on this question are not in point. In Mallory v. Gillett, 21 N. Y. 412; Belknap
v. Bender, 74 N. Y. 446; and Berry v. Brown, 107 N. Y. 659, 14 N. E. Rep. 289,—the promise was in contravention of that provision
of the statute of frauds which declares void all promises to answer for the debts of third persons unless reduced to writing. In
Beaumont *548 v. Reeve, Shir. Lead. Cas. 7, and Porterfield v. Butler, 47 Miss. 165, the question was whether a moral obligation
450. This was not done.
CHAPTER 12: CONSIDERATION 239
In further consideration of the questions presented, then, it must be deemed established for the purposes of this appeal that on the
31st day of January, 1875, defendant’s testator was indebted to William E. Story, 2d, in the sum of $5,000; and, if this action were
founded on that contract, it would be barred by the statute of limitations, which has been pleaded, but on that date the nephew
wrote to his uncle as follows: *549 ‘Dear Uncle: I am 21 years old to-day, and I am now my own boss; and I believe, according to
agreement, that there is due me $5,000. I have lived up to the contract to the letter in every sense of the word.’ A few days later,
and on February 6th, the uncle replied, and, so far as it is material to this controversy, the reply is as follows: ‘Dear Nephew: Your
letter of the 31st ult. came to hand all right, saying that you had lived up to the promise made to me several years ago. I have no
doubt but you have, for which you shall have $5,000, as I promised you. I had the money in the bank the day you was 21 years old
that I intend for you, and you shall have the money certain. Now, Willie, I don’t intend to interfere with this money in any way until I
think you are capable of taking care of it, and the sooner that time comes the better it will please me. I would hate very much to
have you start out in some adventure that you thought all right, and lose this money in one year. * * * This money you have earned
much easier than I did, besides acquiring good habits at the same time; and you are quite welcome to the money. Hope you will
make good use of it. * * * W. E. STORY. P. S. You can consider this money on interest.’ The trial court found as a fact that ‘said
letter was received by said William E. Story, 2d, who thereafter consented that said money should remain with the said William E.
Story in accordance with the terms and conditions of said letter.’ And further, ‘that afterwards, on the 1st day of March, 1877, with
the knowledge and consent of his said uncle, he duly sold, transferred, and assigned all his right, title, and interest in and to said
sum of $5,000 to his wife, Libbie H. Story, who thereafter duly sold, transferred, and assigned the same to the plaintiff in this
action.’ We must now consider the effect of the letter and the nephew’s assent thereto. Were the relations of the parties thereafter
that of debtor and creditor simply, or that of trustee *550 and cestui que trust? If the former, then this action is not maintainable,
Case 12.2
341 Mont. 73, 175 P.3d 899, 2008-1 Trade Cases P 75,993, 27 IER Cases 208, 2008 MT 4
Supreme Court of Montana.
ACCESS ORGANICS, INC., Plaintiff and Appellee,
v.
Andy HERNANDEZ, Defendant and Appellant,
and Mike Vanderbeek, Defendant.
No. DA 07-0115.
Decided Jan. 3, 2008.
3 Did the District Court err in concluding that the non-compete agreement was enforceable as a matter of law, and
thus in granting preliminary injunctive relief to Access Organics?
BACKGROUND
4 On April 25, 2005, Bonnie Poux hired Andy Hernandez *75 (“Hernandez”) to sell organic produce for her sole
proprietorship, Access Organics Sales (“Access Organics”). In July 2005, Hernandez was promoted to sales
manager. On August 29, 2005, four months after his employment began, Hernandez signed a non-compete
agreement and a non-disclosure agreement. The non-compete agreement provided in relevant part:
For good consideration and as an inducement for Access Organics (the Company) to employ Andy Hernandez, the
undersigned Employee hereby agrees not to directly or indirectly compete with the business of the Company and it
successors and assigns during the period of employment and for a period of two years following termination of
employment….
5 Shortly after Access Organics began experiencing financial difficulties and laid off Hernandez and several other
employees. Hernandez voluntarily returned to the company on a part-time basis but resigned a short time later.
CHAPTER 12: CONSIDERATION 241
operating, and managing any business engaged in the same business as Access Organics, Inc., within Flathead
County, MT, [and] consulting with, or being employed in any capacity, by any company engaged in the same
business as Access Organics and using, disclosing, or divulging to others, trade secrets, confidential information, or
proprietary data of Access Organics.”
8 The District Court held a hearing to determine whether Access Organics was entitled to further injunctive relief.
Access Organics presented affidavits from several of their customers which testified that they had been contacted by
Hernandez or Vanderbeek on behalf *76 of Full Circle Sales, in an attempt to solicit their business. The District Court
found that Hernandez and Vanderbeek used contacts acquired prior to their employment with Access Organics, as
well as contacts gained while employed with Access Organics.
9 The District Court held that Hernandez and Vanderbeek violated their non-compete agreements by owning,
operating, and managing Full Circle Sales. The District Court found that the non-compete agreements were
enforceable, because they were restricted in length to two years, were based on good consideration (“continuation of
Defendants’ employment, and therefore, income”), and did not interfere with the public interest. Thus, the District
Court granted a preliminary injunction in favor of Access Organics, enjoining Hernandez and Vanderbeek **902 “from
contacting any current or former client of Access Organics … with regard only to any aspect of the business of organic
produce and from using, disclosing, or divulging to others the list of Access Organics’ [sic] customers….” Only
Hernandez appeals.
constitute an unreasonable restraint of trade under § 28-2-703, MCA. Thus, the court enjoined Hernandez from
contacting any current or former customer of Access *77 Organics, and from using or disclosing Access Organics’s
customer list. Because the District Court granted the injunctive relief based solely on a conclusion of law, we will
review the court’s conclusions of law for correctness.
¶ 14
Is the non-compete agreement an unreasonable restraint of trade in violation of § 28-2-703, MCA?
(2) it must be on some good consideration; and
(3) it must be reasonable, that is, it should afford only a fair protection to the interests of the party in whose favor it
is made, and must not be so large in its operation as to interfere with the interests of the public.
Montana Mountain Products v. Curl,
2005 MT 102, 11, 327 Mont. 7, 11, 112 P.3d 979, 11 (citing
O’Neill v.
242 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
[7][8][9][10] 17 Since Montana’s public policy strongly disfavors agreements in restraint of trade, as discussed
above, we construe non-compete agreements strictly:
Contracts not to compete are by their nature in restraint of trade and are not favorably regarded by the courts. In
interpreting or construing contracts which impose restrictions on the right of a party to engage in a business or
occupation, the court is governed by a strict rule of construction. The agreement will not be extended by implication,
and it will be construed in **903 favor of rather than against the interest of the covenantor.
Dumont v. Tucker,
250 Mont. 417, 421, 822 P.2d 96, 98 (1991) (citing 54 Am.Jur.2d Monopolies Etc. § 521).
*78 ¶ 18
Is the agreement supported by the necessary “good consideration”?
1169. In
Langager,
we upheld **904 an employer’s revisions to the employee handbook, because “Langager
continued to work for Crazy Creek, thereby supplying the necessary consideration” for the changes in the terms of her
employment.
Langager,
¶ 20.
[17][18] ¶ 25 However,
Langager
is distinguishable on several grounds. First, in
Langager,
we found that the
1275. Since the agreement between Hernandez and Access Organics lacks consideration, we need not reach the
244 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
other two prongs. The agreement violates § 28-2-703, MCA, and is unenforceable.
Case 12.3
E.D.Mo.,2010.
1861 Group, L.L.C. v. Wild Oats Markets, Inc.
Slip Copy, 2010 WL 455184 (E.D.Mo.)
United States District Court,
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the
pleader is entitled to relief.” The pleading standard Rule 8 announces does not require “detailed factual allegations,”
Bell Atlantic
Corp. V. Twombly,
550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), but “it demands more than an unadorned, the–
defendant-unlawfully-harmed-me accusation.”
Aschcroft v. Iqbal,
—U.S. —-, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). A
pleading that offers legal conclusions, a formulaic recitation of elements, or naked assertions devoid of factual enhancement does
In March 2000, defendant advised plaintiff that it wanted to expand its operations and lease additional space in Lammert Center. At
that time, defendant occupied its portion of Lammert Center pursuant to a sublease with Schnuck Markets, Inc. In response to
CHAPTER 12: CONSIDERATION 245
defendant’s interest in leasing additional space, plaintiff advised defendant that it would need to relocate other existing Lammert
Center tenants to accommodate defendant’s plan, which would in turn require plaintiff to terminate or modify existing leases.
other tenants, plaintiff incurred costs in connection with efforts to rework defendant’s sublease.
In January 2001, plaintiff, defendant, and Schnuck Markets entered into a termination agreement, in which defendant’s sublease
with Schnuck Markets and Schnuck Markets’s lease with plaintiff would terminate if plaintiff and defendant were able to agree to a
new lease by April 30, 2001. The parties agreed to extend that deadline to June 30, 2001, on April 17, 2001, but then on April 20,
2001, defendant cancelled its agreement to extend the deadline. On April 24, 2001, defendant advised plaintiff that it was not going
signed by the party against whom enforcement is sought; (2) Missouri does not recognize a promissory estoppel exception to the
statute of frauds; and (3) an agreement to negotiate a future contract is not definite enough to support a claim for promissory
estoppel. Plaintiff opposes defendant’s motion arguing that: (1) the complaint alleges facts supporting the elements of a claim for
promissory estoppel; (2) a promise to negotiate in good faith can support a claim for promissory estoppel; and (3) the statute of
frauds is inapplicable because plaintiff is not seeking to enforce the terms of an oral lease.
FN1. Federal courts sitting in diversity apply the law, including the choice-of-law principles, of the forum state.
Klaxon Co.
v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941);
Birnstill v. Home Sav. of Am.,
907 F.2d
795, 797 (8th Cir.1990). This case is before the Court under diversity jurisdiction. The parties apply Missouri law in their
briefs, and neither argues for the application of a different state’s law. Accordingly, the Court will apply the law of Missouri,
the forum state of this Court.
estate leases for a period in excess of one year.” Doc. # 9, p. 4. The Missouri statute of frauds provides that:
No action shall be brought … upon any contract made for the sale of lands, tenements, hereditaments, or an interest in or
concerning them, or any lease thereof, for a longer time than one year … unless the agreement upon which the action shall be
brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith….
MO. ANN. STAT. § 432.010 (West 2009).
claim, plaintiff 1861 Group does not seek to enforce a multi-year oral lease by recovering what it would have earned during the
term of that lease, and therefore, the statute of frauds and the holding in
Whaling
do not apply.
Defendant’s next argument is that “Count VII fails to state a claim because Missouri does not recognize a promissory estoppel
exception to the statute of frauds in the context of promises to sell or lease real estate.” Doc. # 9, p. 5. This argument presupposes
that the statute of frauds applies and that plaintiff’s cause of action requires an exception to it in order to survive. But, as previously
agreement on the terms of the lease. Under these allegations, the Court finds that the alleged promise was sufficiently definite to
support a claim for promissory estoppel.
See Budget Marketing, Inc. v. Centronics Corp.,
927 F.2d 421, 426-28 (8th Cir.1991)
(finding that promissory estoppel claim under Iowa law, which, like Missouri law, is based on Restatement (Second) of Contracts
section 90(1), should survive summary judgment when plaintiff’s evidence indicated that defendant made oral assurances that it
would consummate a transaction, the plaintiff incurred substantial expense in preparing to close the transaction, the defendant was