Schnell v. Nell

Supreme Court of Indiana · 1861 · Contracts

Contractsconsiderationnominal considerationsham considerationadequacyconsiderationnominal considerationpast consideration

Facts

Schnell signed an agreement promising to pay Nell and two others $200 each after the death of his wife, Theresa Schnell. The instrument recited three supposed considerations: the recipients' promise to pay Schnell one cent, Schnell's love and respect for his deceased wife and her assistance in acquiring property, and Theresa's wish expressed in a will that was admitted to be inoperative because she owned no property. The complaint alleged no consideration beyond those stated in the instrument and did not allege that the one cent had been paid or tendered. Schnell answered that the agreement lacked consideration and that his wife had owned no property separately or jointly at her death.

Issue

Whether the written instrument stated a legally sufficient consideration to make Schnell's promise to pay $600 enforceable. More specifically, the court asked whether one cent, affection for a deceased wife and her past services, or a promise to honor an inoperative will could support the promise.

Rule

A promise is not enforceable without legal consideration. Mere nominal consideration in a simple exchange of fixed sums of money, moral obligation alone, past consideration, and compromise of a claim that is legally groundless do not constitute sufficient consideration; inadequacy doctrine does not save a bargain where the stated consideration is plainly nominal and intended as such.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

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

In Columbus, Ohio, Martin Voss signed a sealed writing promising to pay Elena Ruiz $50,000 in six months. The writing stated that Elena would pay Martin one dollar "as consideration," and both sides understood Martin was really trying to make a generous gift after Elena had helped his family through a difficult time.

If Martin refuses to pay, is his promise most likely enforceable?

Explanation. Under the majority opinion, a token payment such as one cent in a direct exchange of fixed sums of money is merely nominal when plainly intended as a pretense rather than a real bargain. The court distinguished ordinary inadequacy cases from a simple exchange of money for money whose values are exactly fixed. A seal did not make the promise enforceable, and the problem is legal insufficiency of consideration, not Elena's subjective motives.