Moral or Past Consideration


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Terms:


Moral Consideration:
Consideration based on a moral duty.

Past Consideration:
A past promise or act which forms the basis of a future promise.


A promise is said to be given for moral or past consideration when the promisor’s motivation for making the promise is a past benefit he received that gave rise to a moral, but not legal, obligation to make compensation. For example:

While walking down the street, Marsha steps into a hole and breaks her leg. Jan sees Marsha fall and rushes to her aid. Jan takes Marsha back to her apartment and nurses her back to health. In a show of gratitude, Marsha promises to pay Jan $5,000 for the care that Jan gave her. In this case, Marsha’s motivation for making this promise is the past benefit that Jan gave to her which gave rise to the moral obligation to compensate Jan.

The traditional rule is that a promise based on moral or past consideration is an unenforceable donative promise. See Mills v. Wyman, 3 Pick. 207 (Mass. 1825)

However, there are three major exceptions to the traditional rule.

The first exception involves a promise to pay a debt barred by a statute of limitations. A promise to pay a debt barred by the statute of limitations is enforceable even if no new consideration is given. In such cases, the promise is considered a new promise and so only the terms of the new promise are enforceable. For example: 

  1. Thelma owes Louise $1,000 but the statute of limitations has run out on the debt and Louise can no longer sue Thelma for the money. Thelma writes to Louise saying, “I know that I owe you $1,000 and I will pay it.” Thelma’s promise is enforceable
  2. Thelma owes Louise $1,000 but the statute of limitations has run out on the debt and Louise can no longer sue Thelma for the money. Thelma writes to Louise saying, “I know I owe you $1,000 and I will pay it to you if I win the lottery.” The promise is enforceable. However, Thelma does not need to perform on her promise unless she wins the lottery.
  3. Thelma owes Louise $1,000 but the statute of limitations has run out on the debt and Louise can no longer sue Thelma for the money. Thelma writes to Louise saying, “I know I owe you $1,000 and I will pay you $800.” This promise is enforceable, but Louise will only be able to recover $800, not the original $1,000.

Most jurisdictions have adopted special provisions that say that in order for a promise to pay a debt barred by the statute of limitations to be enforceable, it needs to be in writing. However, if it is not in writing, it is not enforceable.

The second exception to the rule that a promise based on moral or past consideration is unenforceable is a promise to perform a voidable obligation. This promise is enforceable despite the absence of new consideration so long as the new promise is not subject to the same defense that made the original obligation voidable. For example:

Ramon Garcia is a seventeen-year-old baseball phenom. The Boston Red Sox sign Garcia to a multi-year contract. Two weeks after Garcia’s eighteenth birthday, he promises the Red Sox that he will perform the contract. In this situation, the original contract is voidable at Garcia’s discretion because Garcia is still a minor. However, the promise he makes after his eighteenth birthday to honor the contract is enforceable because it is not subject to the same defense that made the original obligation voidable. 

The third exception to the rule that promises based on moral or past consideration are unenforceable is promises to pay debts discharged by bankruptcy. 
As a matter of contract law, a promise to pay a debt discharged by bankruptcy is enforceable. Such a promise is given the same treatment as a promise to pay a debt that had been barred by the statute of limitations. However, unlike promises to pay debt that have been barred by the statute of limitations, states do not require that a promise to pay debts discharged by bankruptcy be in writing in order to be enforceable. See Zabella v. Pakel, 242 F.2d 452 (7th Cir. 1957).

The emerging modern rule is that a promise based on moral or past consideration is enforceable, even if it does not fall within one of the three exceptions, so long as the promise is based on a material benefit that was previously conferred by the promisee on the promisor and provided that the benefit gave rise to a moral obligation to make compensation. For example:

Abbot is walking down the street one day when he sees his friend Costello’s house on fire. Abbot runs into the house to save Costello. Abbot succeeds in saving Costello but, in the process, Abbot is seriously burned. Costello promises to pay Abbot a monthly allowance for the rest of Abbot’s life. Costello pays Abbot the allowance for twenty years but, upon Costello’s death, his estate refuses to continue paying Abbot. Under the emerging rule, Costello’s promise is binding because his promise to pay Abbot was based on a material benefit that he got from Abbot. See Webb v. McGowin, 168 So. 196 (Ala. 1935).

However, even under this modern view, a promise to make compensation for a past benefit will not be enforceable if that benefit was given as a gift because there is no moral obligation to repay the value of a gift. For example:

Preston gives Henry a new car for Henry’s birthday. Later, Henry promises to repay Preston the value of the car. Henry’s promise is unenforceable because the benefit that Preston gave Henry was given as a gift and there is no moral obligation to repay the value of a gift.

Further, even under the modern view, a promise based on a moral obligation will not be enforceable where the promisor himself did not receive a material benefit, even if the promisee incurred expenses. See Mills v. Wyman, 3 Pick. 207 (Mass. 1825). For example:

Charles’s son William becomes sick while away from home. Without having been asked to do so, Harry takes care of William. Despite Harry’s care, William dies. Charles writes to Harry and promises to pay the expenses that Harry incurred in caring for William. Charles’s promise is unenforceable because Charles himself did not receive a material benefit from Harry’s actions.



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