Meyer v. Benko

Brief Fact Summary. The adequacy of consideration for a piece of property sold was at issue.

Synopsis of Rule of Law. The test to determine whether consideration is adequate is not "whether the [vendor] received the highest price obtainable for his property, but whether the price he received is fair and reasonable under the circumstances."

Facts. The Plaintiff, Meyer (the "Plaintiff"), entered into a contract with the Defendants, Irene and Howard Benko (the "Defendants"), to purchase the Defendants' home for $23,500.  The document memorializing the transaction was entitled "Deposit Receipt and Agreement of Sale."  The listing real estate agent testified that the value of the home at the time the contract was entered into was "down a little" from the initial listing price of $23,500.  Irene Benko testified that the property was worth $30,000 to her, but that she did not know the market value.  Howard Benko testified that the market value of the home was between $29,000 and $30,000.  However, Howard Benko testified that he signed the "Deposit Receipt and Agreement of Sale" for $23,500 because he wanted to sell his home quickly.       The lower court found that a contract did not exist and that specific performance should be denied due to an inadequacy of consideration.

Issue. Was consideration fair and adequate?

Held. Yes.  To determine whether consideration was fair and accurate "all circumstances surrounding the transfer of the property as they then existed at that time must be considered."  For a consideration to be deemed adequate, the price need not be "the full value of the property."  The test is not "whether the [vendor] received the highest price obtainable for his property, but whether the price he received is fair and reasonable under the circumstances."
•    The court observed that the discrepancy between the sales price agreed to and the full value of the property is reconcilable, because Howard Benko testified he wished to sell the property quickly and would accept a lower price.

Discussion. This case demonstrates how fact intensive certain damage calculations can be, and how important it is to determine the motive of the buyers and sellers when construing damages.