Kirksey v. Kirksey: The Case of the Promise Which Lacked Consideration

Farm House Real Estate Property

Real Estate

The law of contracts is primarily concerned with deciding whether promises are enforceable in a given set of circumstances. In order to be (facially) valid, the elements of a contract must all be satisfied. A contract consists of the following elements: offer, acceptance, consideration, legality, capacity and writing (when applicable). Occasionally, a dispute arises over whether one (or more) of these elements has been successfully established. These disputes have created an enormous body of case law which serves to clarify the requirements for contractual elements. This body of case law stretches back literally hundreds of years. In the case of Kirksey v. Kirksey (1845), a dispute developed over whether adequate consideration was exchanged when a landowner encouraged his sister-in-law to live on his land.

Facts

The plaintiff was the defendant’s sister-in-law. After the death of her husband, the plaintiff received a letter from the defendant in which he encouraged her to move from her current location to his farm. He promised that if she moved he would allow her to live in a house on his property. The plaintiff took the defendant’s offer and moved into the house on the defendant’s land. Two years later the defendant ordered the plaintiff to leave the property. The plaintiff brought suit against the defendant and argued that the promise extended to her was an enforceable contract.

Law

In order for a contract to be enforceable, there must be adequate consideration. Consideration roughly equates to value. Consideration is present when the parties of a contract exchange things which are of equal value. For instance, when a house is sold for its market price, this constitutes valid consideration because there is an exchange of equal value. If someone were to sell a house for well below its market value – say, for just $1 – consideration has not been established because the values are so disparate.

Ruling

The court (the Supreme Court of Alabama) ruled that the promise made by the defendant was unenforceable because, even though the plaintiff uprooted herself and relied on the defendant’s word, no consideration had occurred. The main reason that the defendant wanted the plaintiff to move was so he could be closer to her and her children following the death of her husband (the defendant’s brother), and so the plaintiff essentially exchanged her physical “closeness” for her stay on the property. And so even though the plaintiff’s reliance on the promise was reasonable, she did not offer enough in return in order to produce valid consideration.

Though the message of this case may seem almost childishly self-evident to us today, it represents an important development in the law of contracts since it added clarification to the element of consideration. In law, boundaries are sometimes never completely defined, they are only made slightly clearer and clearer as new factual scenarios add more and more clarification. Kirksey v. Kirksey is one example of this process!

Image credit: Roman Boed

Regardless of whether you encourage people to live on your land, owning real estate is generally a good investment. To learn more about the tax strategies which can save you money as a property owner, view the following presentation by our CPA Jessica Chisholm

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Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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