ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, October 15, 2018

Lack of Consideration – Or Not!

Currently in the midst of teaching consideration, I found the following case curious not so much because of its somewhat questionable facts, but because of the court’s puzzling reasoning.

Plaintiff Jose Torrez, a skilled laborer, agreed to renovate some buildings owned by defendant Koray Ergur and his companies.  Torrez was promised a bonus of $150,000 for nine months’ worth of work if he would work for the “reduced hourly wage” of $10 per hour.  He did. At some point in time, his hourly pay was increased to $11 per hour.  After completing a total of 18 months of labor, Torrez was terminated and – you guessed it – denied the bonus.  He brought suit claiming, among other things, breach of oral contract and the bonus $150,000 in damages. Images

The court rejected the latter.  Of course, since the contract was for the completion of nine months of labor, the Statute of Frauds was not implicated and the oral promise was thus enforceable if the court had wanted to do so.  It did not, however.  Instead, it found that Torrez had, during the legal proceedings, “contractict[ed] his allegation of reduced wages as the consideration for the $150,000 bonus.”  The court concluded that “while Torrez recited facts in his pleading to support the element of consideration for the promised bonus [i.e. the low pay of $10 per hour], the evidence presented by deposition and at Hearing [i.e. the “non-reduced” hourly wage of $11 per hour] refutes the existence of consideration … Therefore … it is clear that no consideration existed for the promise to pay a bonus.”

The court apparently found that because Torrez actually received one single dollar more per hour over nine months, there was no consideration for the original promise of working for a “reduced salary.”  However, consideration is measured at the point of contract formation, not after the subsequent turn of events.  Receiving only $10 or even $11 per hour instead of what skilled, manual laborers could get is a “reduced wage” given the market for such work.  It is puzzling why the court found that “no consideration existed for the promise to pay a bonus” when such consideration was fairly clearly present from the outset, namely the promise to work for not much with a promise of a bonus upon completion of the work. Unknown

Is something else at play here?  I think so.  It strikes me as odd that, pardon me, a manual laborer would be promised a bonus of no less than $150,000 for nine months of work.  That is $16,999 per month or, working 40 hours a week, $104 per hour.  Skilled workers can and do demand high fees in some locales, and maybe in Ohio as well. But $150,000 does seem high.  Was the court simply trying to protect the defendant from what may have been an attempted fraud by Torrez?

The truth will probably never be known here. Regardless, this case nicely demonstrates how the consideration doctrine is still relevant and, as always, the importance of getting contracts in writing even though they do not haveto be.  Even if Torrez had been promised the asserted bonus, it is also wise to remember the old adage that if something seems too good to be true, it might be.  Maybe Torrez was the one fooled in this case.

The case is Jose Torrez v. Koray Ergur, et al., Case No. G-4801-CI-201604375-000 (Court of Common Pleas, Ohio, Aug. 31, 2018).

H/t to colleagues on Contracts listserv for bringing this case to the attention of all of us.

https://lawprofessors.typepad.com/contractsprof_blog/2018/10/lack-of-consideration-or-not.html

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