Batsakis v. Demotsis – Texas Court of Civil Appeals 226 S.W.2d 673 (1949).
 Facts
o Batsakis sued defendant to recover $2000 with interest at the rate of 8% per annum
from 4/2/1942, alleged to be due on the following instrument, which is written in
the Greek language (p. 119).
 Demotsis says that they received $2000 of US currency borrowed for the support
of family, is impossible to transfer dollars from America. Accepted with
expressed promise that he/she will return again in American dollars either at end
of present war or before in the event that you might be able to find a way for
Batsakis to collect money from representative in America. Until final execution
to the above amount an 8% interest will be added and paid with principal.
 Procedural History
o Trial court without the intervention of a jury resulted in a judgment in favor for
plaintiff for $750 principal, and interest at the rate of 8% per annum from 4/2/42 to
the date of judgment, totaling $1163.83, with interest thereon at the rate of 8% per
annum until paid. Plaintiff appealed.
 Issue
o Was the consideration inadequate?
 Holding
o The plea of want of consideration was unavailing. A plea of want of consideration
amounts to a contention that the instrument never became a valid obligation in the
first place. Reformed and affirmed.
Commented [PI1]: WWII – Demotsis has a problem, she
wants to get to the United States.
Commented [PI2]: Demotsis borrows $25 worth of dollars
from Batsakis, makes promise to pay $2000
Is the promise enforceable or no?
Commented [PI3]: Batsakis sues her in Texas – because it
has to do with HER American currency.
Could he sue her in Greece? – sure, but would have to go
to US courts to domesticate his judgments (take Greek
judgment to US court and ask the court to convert it from
Greek to American and execute judgment against assets in
the united states.
Commented [PI4]: Defendant’s defense
Inadequate consideration - $25 of consideration to
render enforceable a promise for $2000.
Commented [PI5]: Term applied to a transaction where no
money, property, or goods were intended to pass from one
party to another party.
Commented [PI6]: A written document; a formal or legal
document in writing, such as a contract, deed, will, bond, or
lease.
Commented [PI7]: To correct, rectify, amend, remodel
 Reasoning

o Mere inadequacy of consideration will not void a contract.
o Judgment indicates that the trial placed a value of $750 on them or on the other
consideration which plaintiff gave defendant for the instrument if he believed
plaintiff’s testimony.
o The plea of failure was not unavailing – defendant got exactly what she contracted
Commented [PI8]: Add to list of things that don’t
constitute consideration.
Goes back to the widow – she bargained for worthless
note in exchange for paying his obligation to the bank.
(mutual inducement - §71 of the Restatement).
Not looking for consideration to be equal to, but to be
bargained for.
79 (a) – if the requirement of consideration is met, there
is no additional requirement of a gain, advantage, or benefit
to the promisor or a loss, disadvantage, or detriment to the
promisee.

for according to her own testimony. Court should have rendered judgment in favor

of plaintiff against defendant for the principal sum of $2000 evidenced by the

instrument sued on, with interest as therein provided.

 Notes and Questions

o Adequacy of consideration. In ascertaining the presence of consideration, the courts

will not “weigh” the consideration, or insist on a “fair” or “even” exchange. Williston

put it as “an ‘elementary principle that the law will not enter into an inquiry as to

the adequacy of the consideration.’ This rule is almost as old as the law of

consideration itself.” (Williston on Contracts § 115; Restatement § 79). Present-day
courts faced with a grossly unfair bargain coupled with other factors tending toward
excuse are probably more likely to rely on other doctrines rather than a lack of
Commented [PI9]: Comment e of § 79 – gross inadequacy
of consideration may be relevant to the application of other
issues, such as fraud, mistake, lack of capacity, duress, or
undue influence.
Commented [PI10]: Fraud, mistake, or undue influences –
something wrong with how the contract was made.

consideration.

o Exploring Batsakis Case. Trial court judge who decided apparently concluded that

the 500000 drachmas that the defendant received from the plaintiff were then Commented [PI11]: It is now Euros in Greece

worth $750 in American money.

  Would the appellate court’s disposition of the case have been any different if the

trial court had accepted defendant’s contention that the Greek money she

received was worth only 25 American dollars?

 If you were trial judge and believed defendant’s story, would you have had any

reluctance to enforce her promise to the plaintiff?

 Are there any legal theories other than lack of consideration that may have been

invoked in her behalf?

o Change in the law’s concern for fairness. Critical Legal Studies analysts and others

have seen ascendancy of the bargain theory of consideration a movement on the

law’s part away from an earlier willingness to police the “fairness” of bargains, and

toward a view of contract particularly adaptable to commercial speculation in

commodities and securities, where the parties determine the contract price of the

commodity in question based on their appraisal of the market. Horwitz says “The

most important aspect of eighteenth century conception of exchange is an equitable

limitation on contractual obligation. Under the modern will theory, the extent of

contractual obligation depends upon the convergence of individual desires. The

equitable theory…limited and sometimes denied contractual obligation by reference

to the fairness of the underlying exchange.”

o Option Contracts, Consideration, and Limiting the Power to Revoke an Offer.

Fundamental common law rule that an offer is freely revocable unless and until it is
Commented [PI12]: Restatement (second) § 42
accepted by the offeree. Power of revocation exists even if the offer itself expressly
Commented [PI13]: Steiner v. Thexton, 226 P.3d 359, 365-
366 (Cal 2010).
states that it will not be revoked. “Option contract based on consideration
Commented [PI14]: Contract restricting power to revoke
an offer.
 contemplates two separate contracts, ie, the option contract itself, which for

something of value gives to the optionee the irrevocable right to buy under specified

terms and conditions, and the mutually enforceable agreement to buy and sell into

which the option ripens after it is exercised. Manifestly, then, an irrevocable option

based on consideration is a contract…Conversely, an option without consideration is

not binding on either party until exercised; until then, the option ‘is simply a

continuing offer which may be revoked at any time.’” Option contracts serve a useful

purpose in commercial relations, by permitting one who is considering a contractual

transaction to delay committing herself to the contemplated exchange without

fearing that such delay will cost her the ability to enter into that contract, should she

eventually decide to accept it. Optionee can allow the option to lapse and not

exercise the right to enter the principal contract. In that case the consideration paid

for the option is retained by the offeror, unless the parties have agreed otherwise.

o Nominal consideration. Apart from possible payment of substantial consideration, Commented [PI15]: Not consideration.

option contracts will often cite the payment of what is traditionally called nominal

consideration. Question: whether the payment of such nominal consideration will

make the option contract enforceable since it appears not to have been the actual

inducement for granting the option. Cases generally appear to hold that even a very

small amount of money can serve as effective consideration to make an option

contract irrevocable. Some courts have even found consideration in an implied

promise on the apart of the option holder to pay the nominal consideration at some

later time.
o Services as consideration. An offeree in an option contract may give services or some Commented [PI16]: Could be acts such as conducting
engineering studies of the land, engaging in efforts to
obtain a loan to finance the purchase, or searching for
other form of consideration instead of the payment of money. investors, if that performance was bargained for.

o Second Restatement suggested rule for option contracts. Most courts would require

that the nominal consideration be paid, but the second Restatement §87(1)(a)
adopts a different approach by providing that an offer made in a signed writing is
binding “as an option contract” if it “proposes an exchange on fair terms within a
Commented [PI17]: Comment c – refers to this rule as one
that sanctions enforcement on the basis of a “false recital of
nominal consideration”. Explains rule is based on form
rather than the implication of a promise: signed writing has
vital significance as a formality” and therefore its recital of
consideration should not be open to invalidation by “oral
testimony which is easily fabricated”.

reasonable time” and “recites a purported consideration” for its making.

o Other formality rules or reliance as grounds for enforcing an option contract. UCC §2-

205 firm offer rule adopts a formality standard that may render an option contract

for the sale of goods enforceable without consideration. In the absence of option

contract with consideration or other recognized basis for enforcement, classical

contract law provided no protection to an offeree who relied on an offer that she

had not yet accepted or who relied on a promise not to revoke the offer. Offeror

remained free to revoke his offer at any time until acceptance took place despite

any reliance.

o Application of the mailbox rule to option contracts. The second restatement §63(b),

comment f: “the usual understanding is that the notification that the option has

been exercised must be received by the offeror” before the stated time limit.

o Termination of an option. An option contract is a contract itself and not an offer

subject to the rules stated in §36. Restatement §37 provides that “the power of

acceptance under an option contract is not terminated by rejection or counteroffer,

by revocation, or by death or incapacity of the offeror…”. To discharge an option,

 the parties would need to make another binding agreement, ostensibly with new

consideration on both sides, or establish other grounds for termination of the power

of acceptance pursuant to other doctrines.

o Illusory promises. §77 of the Restatement – a promise or apparent promise is not Commented [PI18]: Output contracts.

consideration if by its terms the promisor or purported promisor reserves a choice of

alternative performances unless

 Each of the alternative performances would have been consideration if it alone

had been bargained for; or

 One of the alternative performances would have been consideration and there is

or appears to the parties to be a substantial possibility that before the promisor

exercises his choice events may eliminate the alternatives which would not have

been consideration.

Plowman v. Indian Refining Company – US District Court 20 F. Supp.1 (E.D. Ill. 1937). Commented [PI19]: 18 Plaintiffs in one case
How?
Class action suit? – where a lead plaintiff must be a good
 Facts representative of the class and have a good
This is a consolidating case.
o 13 persons and administrators of 5 deceased brought suit alleging defendant made Commented [PI20]: Eastern District of Illinois.
Commented [PI21]: Fiduciaries/administrators/personal
separate contracts to pay each of the individual plaintiffs and each of the deceased representatives bring case on behalf of dead people

persons monthly sums equal to ½ of the wages formerly earned by such parties as

employees of the defendant for life. Each of the claimants had been employed for
some years at a fixed rate of wages, usually upon an hourly basis but payable
monthly or semimonthly.
Commented [PI22]: When a corporation has made a
promise for somebody’s life, the court is reluctant to
enforce a contract for life unless the contract is entered into
by the Board of Directors for the corporation (the power of
agents to bind the corporation).
For life is a lightbulb deal – rules for contracts for life are
different than normal rules. Be on the lookout for
ramifications for promise for life.
 o On 7/28/30 – VP and general manager called employees separately into his office
and made contracts to pay for the rest of natural life sum equal to ½ of the wages he
was then being paid.
o Consideration arose out of then-existent relationship.
o Most employees were participants in group insurance, the premiums for which had
been paid approximately ½ by the employee and ½ by the company, and their parts
of the premiums were to be deducted from their payments as formerly.
o Payments were made until 7/1/31, when they were cut off and the arrangement
was terminated.
 Procedural History
o Plaintiff’s argument – each of the contracts VP agreed to had sufficient
consideration due to longstanding relationship with each employee, desire to
provide for future welfare, and need to come into town to get the checks.
o Defendant’s argument – contends and offered evidence that nothing was said to
employee about continuing payments for natural life; payments were gratuitous,
continuing at the pleasure and will of defendant; that the original arrangement
was not authorized, approved, or ratified by the board of directors, the executive
committee thereof, or any officer endowed with corporate authority to bind the
company; that there was no consideration for the promise to make the
payments; and that it was beyond the power of any of the persons alleged to
have contracted to create by agreement or by estoppel any liability of the
company to pay wages to employees during the remainders of their lives, if they
Commented [PI23]: Empty title – no real authority.
Commented [PI24]: Marty’s mental image – out in hot and
dusty area in Illinois, there’s a dirt road, and there are 18
old guys shuffling into town to get their checks.
Coming in to get check – condition of accepting the gift.
Unexecuted gift of giving check once a month is not
enforceable until the condition of shuffling into town and
taking possession of physical check happens.
Commented [PI25]: This has to do with business of giving
somebody a promise for life
Life is not enforceable unless it is the Board of Directors
that makes the promise.
Commented [PI26]: Corporation (artificial jurol person) can
only act through agents, agents can only do those things
they’re authorized to do. Nobody with the authority to
make this promise for life did it themselves or made the
promise.
Commented [PI27]: Should be authority – boss has to have
power to authorize to do the act. Agents can get authority
through apparent authority (if company treats agent in
particular way that makes it reasonable to be treated in a
certain way).
Apparent authority due to the regular course of business.
Commented [PI28]: Another way the court could be bound
– ratification
Principal can ratify an act about an agent – if they know
about the facts and accepts the promise, they can ratify the
action.
 did not render actual services. Defendant admits the payments as charged and

the termination of the arrangement on June 1, 1931.

 Issue

o Is long service in the past sufficient to support a promise today?

o Was making them come to town a detriment?

 Holding

o Past consideration is not sufficient consideration to make agreement

enforceable.

 Reasoning

o Consideration is something given in exchange for a promise or in a reliance upon

the promise. Something which has been delivered before the promise is

executed, and, therefore, made without reference to it, cannot properly be legal

consideration.

o Appreciation of past services or pleasure afforded to the employer thereby is not

a sufficient consideration.

o If there be no legal consideration, no motive, or affection for another or desire

to do justice, or fear of trouble, or a desire to equalize the shares in an estate, or

to provide for a child, or regret for having advised an unfortunate investment,

will support a promise.

o Preexisting duty rule – long and faithful services, past consideration is

contradictory term

 Notes and questions

o Past consideration. Services already performed could be only “past

consideration”, which is a “self-contradictory” term: Something already done

cannot constitute consideriaton for a later promsie. Nor can any “moral

obligation” arising out of past faithful service constitute consideration, unless

the “moral” duty was also a “legal” one. Commented [PI29]: However certain

o Issue of authority