LaPorte v. Blum

Vermont Superior Court, Chittenden Unit, Civil Division · 2015 · Contracts

ContractsOption contractsConsiderationoption contractconsiderationnominal considerationrecited considerationirrevocability

Facts

The grandparents transferred the family land to their children in 2006 while reserving a life estate, and at the same time executed a lease and an option allowing their grandsons, William and James, to buy the land for $400,000 within nine months after the later grandparent's death. The option recited consideration of "Ten Dollars and other good and valuable consideration," but no one recalled any actual exchange of the ten dollars. The court found that the grandsons agreed to remain on the land and continue the family sugaring operation only because they were given the lease and option, and that the grandparents wanted that continuity. After both grandparents died in 2013, defendants sent a letter purporting to withdraw the option, but the grandsons obtained financing and attempted to exercise it within the contractual time period.

Issue

Was the option unenforceable because the recited ten dollars was never actually paid, and if not, could defendants nonetheless revoke the option before plaintiffs exercised it? More specifically, did the option have sufficient consideration to make it binding and irrevocable during the option period?

Rule

A written option agreement is not invalidated by proof that the recited nominal consideration was not in fact given. If an option is supported by consideration, including other bargained-for consideration besides a nominal recital, it is a continuing offer that cannot be unilaterally withdrawn before the stated deadline; upon timely exercise, it becomes a binding contract.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Montpelier, Vermont, Owen Mercer signed a written option giving Dana Ruiz 90 days to buy a vacant lot for $180,000. The document recited that it was given for "$10 and other good and valuable consideration," but everyone later agreed no one actually handed over the $10 when the option was signed.

If Owen argues the option is unenforceable solely because the recited $10 was never paid, how should a court rule under the majority approach?

Explanation. The governing rule is that a written option agreement is not invalidated by proof that the recited nominal consideration was not in fact given. The majority adopted the Restatement approach, reasoning that such nominal recitals commonly reflect party intent even when the money is not literally exchanged. (Derived from LaPorte v. Blum (n.d.).)