Brief Fact Summary.
Janis Carlisle sued T&R Excavating, Inc. after Thomas Carlisle failed to complete construction work for Wishing Well, Inc.
Synopsis of Rule of Law.
A contract is required to have consideration in order to be binding.
Janis Carlisle (Janis) owned Wishing Well, Inc. and Thomas Carlisle (Thomas) owned T&R Excavating, Inc. (T&R). Janis and Thomas got married and Janis began working as a bookkeeper for T&R shortly thereafter. When Thomas offered to pay Janis, she refused. Thomas then agreed to do work on Janis’s building at no cost and Janis accepted the proposal. Janis and Thomas divorced and Thomas never completed the construction work. Janis sued T&R for breach of contract and the trial court granted judgment to Janis. T&R appealed.
Whether a contract is required to have consideration in order to be binding.
Yes. There was no consideration for Thomas to do the free construction work. Thomas’s agreement to work on Janis’s building was a gratuitous promise with a condition. No contract existed between Janis and T&R, the judgment of the trial court is reversed.
Consideration exists in a contract if there is a benefit to the promisor or forbearance on the part of the promisee that is in the form of an act, forbearance, or return promise in return for the original promise. Without consideration, no contract exists. A gratuitous promise does not constitute a contract, even if the promisee has to perform an action, because no consideration exists.