ProfessorMelissa A. Hale
CaseCast™ – "What you need to know"
Brief Fact Summary. P brings a breach of contract action against D because D refuses to honor a pension plan agreement.
Synopsis of Rule of Law. Mutuality of obligation requires that consideration for a promise be bargained for and given in exchange for that promise.
Issue. After being notified of her right to a pension plan, does P’s continuation to work for D constitute a valid consideration?
Held. No. But judgment affirmed for other reasons. See the second part of the opinion at p. 91, Farnsworth Cases and Materials, 6th Edition.
P’s continuation to work after being notified of the pension plan lacks the mutuality of obligation, which is essential to the validity of a contract. There was no language predicating P’s right to a pension plan upon her continued employment. P made no promise or agreement to continue her employment with D in exchange for D’s promise to pay P her pension plan.
Discussion. For a consideration to be valid, it must be bargained for and given in exchange for a promise.