Reference no: EM133357761

Case Study: Jack Tallas emigrated to the United States from Greece in 1914. He lived in Salt Lake City for nearly 70 years, during which time he achieved considerable success in business, primarily as an insurance agent and landlord. Over a period of 14 years, Peter Dementas, a close personal friend of Tallas's, rendered services to Tallas, including picking up his mail, driving him to the grocery store, and assisting with the management of his rental properties. On December 18, 1982, Tallas met with Dementas and dictated a memorandum to him, in Greek, stating that he owed Dementas $50,000 for his help over the years. Tallas indicated in the memorandum that he would change his will to make Dementas an heir for this amount. Tallas signed the document. Tallas died on February 4, 1983, without changing his will to include Dementas as an heir. He left a substantial estate. Dementas filed a claim for $50,000 with Tallas's estate. When the estate denied the claim, Dementas brought this action to enforce the contract. The trial court dismissed Dementas's claim, stating that his contract with Tallas lacked consideration. Dementas appealed.

Issue: Was the contract enforceable?

Opinion. Orme, Judge. The burden of proving consideration is on the party seeking to recover on the contract. Even though the testimony showed that Dementas rendered at least some services for Tallas, the subsequent promise by Tallas to pay $50,000 for services already performed by Dementas is not a promise supported by legal consideration. Events which occur prior to the making of the promise and not with the purpose of inducing the promise in exchange are viewed as "past consideration" and are the legal equivalent of no consideration. This is so because the promisor is making his promise because those events occurred, but he is not making his promise in order to get them. There is no bargaining, no saying that if you will do this for me I will do that for you. A benefit conferred or detriment incurred in the past is not adequate consideration for a present bargain.

This rule can surely work unfair results and has accordingly been criticized. We acknowledge, as have other courts in disregarding contracts for lack of consideration, that
appellant will probably remain convinced he should be paid. Nevertheless, he failed to meet his burden of proof, and this court will not find a contract where one has not been proved to exist.

Holding. The appellate court held that Tallas's promise to pay Dementas $50,000 was unenforceable because it was based on past consideration. The court cited the rule of contract law that a promise based on a party's past consideration lacks consideration.

Question: The trial judge commented, If Tallas thought it was worth 50,000 bucks to get one ride to Bingham, that's Tallas' decision. To what legal doctrine was he referring?

Question: Then why did Dementas lose the case?

Question: What is the rule about past consideration?

Question: There is one primary exception. What is it?