Book Opener

Common law judgesrarely entertainarguments about theadequacy of consideration.They only makeexceptions to thisstandard when theyencounter a situationthat they believe isunconscionable. Oneexception is the case ofSchnell v. Nell, an 1861agreement in which aman promised to pay$600 in return for theloan of one penny.A Promise Not to SueIf one party has the right to sue another party but gives up that rightin exchange for something of value, the court will generally uphold theexchange as valid consideration. A promise by one party not to sueanother party is a clear example of forbearance. Pending lawsuits arefrequently settled in this manner.Example 2. Abigail was eating a tuna steak for lunch at Martini’sEatery when she began to suffer terrible stomach pains. She wasrushed to a local hospital. In the emergency room, she was diagnosedwith food poisoning. The type of food poisoning that shehad could only have resulted from the improper refrigeration ofthe tuna that she had for lunch. Abigail elected to sue Martini’s,alleging the restaurant was negligent in not properly refrigeratingthe tuna. Martini’s offered her $5,000 if she would drop her lawsuit.Abigail agreed. The thing of value that Abigail transferredto Martini’s was her right to complete her lawsuit.In Example 2, after Abigail accepted the offer and agreed not to sueMartini’s, her right to sue was terminated, at least on the groundsdescribed in the agreement. The agreement she would be asked to signis called a release . Often, agreements not to sue are negotiated evenafter a lawsuit has started. In fact, such agreements can even be negotiatedin the middle of a trial.PROMISES NOT TO SUEOften an insurancecompany will want anindividual to sign a releasepromising not to sue thecompany in exchange fora monetary settlement.Is a promise not to sue validif the parties later discoverthat the party promising notto sue really had no legalgrounds to sue in the firstplace?168 Unit 2: Entering Into Contracts