Understanding Gift Promises in Law

as we continue with our discussion of consideration we now turn to the topic of gift promises you may recall from an earlier lesson that we learned that contract law is not like santa claus you may also remember that a gift or a promise to give a gift is generally not enforceable through the legal system now there may be a moral obligation to follow through on a promise to give a gift but for the most part the law does not get involved with promises that are merely to give gifts that rule seems fairly straightforward and in many respects it is but as we'll see in the case we are about to discuss that is not always true sometimes drawing the line between something that's a gift and something that qualifies as consideration can be a little bit fuzzy that brings us to the case of weavertown transport leasing vs moran it involved some pittsburgh steelers season tickets and the seat licenses that were required for a person to be eligible to purchase the season tickets the issue ultimately between mr moran who was an employee at weavertown but before the story's over is not is that he received no consideration for the season tickets and seat licenses he gave to his employer because weavertown in fact never assumed his obligation or his indebtedness to the steelers and i think you'll see this was a fairly convincing argument as we dig into the facts so what happened here moran had offered to weavertown then his employer to sell his seat license fee at cost if you have ever dealt with seat licenses in a professional sports setting where the possibility exists of charging a separate seat license in addition to game tickets and this is fairly common in the national football league in particular we're dealing with a hefty chunk of change here but moran offered to sell both the seat license and the accompanying season tickets for a particular tic season to weavertown again his employer at the time so he would transfer the seat license from his name to that of weaver town if and when the steelers would permit moran to do so now we don't actually get around to that permission happening but toward the end weavertown wrote checks for 3 840 to the stadium building fund for the new stadium that was underway at the time and for license fees corresponding to four club level seats weavertown then wrote a check for five thousand eight hundred and four dollars to the steelers organization for the face value of the season tickets for the 2001 and 2002 season now how was this done as a transactional matter the checks were delivered to moran who then sent them to appropriate payees whether that was the steelers organization or the stadium building fund doesn't really matter for our purposes what does matter for our purposes is that after this particular transfer for the 01 to o2 season on may 11th moran resigned his position with weavertown so weavertown was no longer his employer and later on when weavertown said hey we want that seat license you were going to sign over to us we're going to keep the tickets because those licenses are incredibly difficult to come by moran said no i'm keeping them and this lawsuit ensued the argument that ultimately succeeded in the case which you'll see on your screen is one that involves consideration moran contends that he received no consideration for the season tickets and seat licenses due to weavertown's lack of obligation to the steelers what do we mean by that look at what the court says instead he moran argues that his arrangement with weavertown was gratuitous conditioned on weavertown standing in his place by paying the amounts due the steelers and the steelers organization for the seats in question he effectively illustrates this point by observing that if the season tickets for some reason were no longer valuable and weavertown did not want them anymore it is moran who would be obligated to the pittsburgh steelers and not weavertown so you might think to yourself how can there be a gift when thousands of dollars changed hands now we're going to have to look back at a famous contracts hypothetical to see why why was this a conditional gift and that is the term you need to remember because it comes up so frequently in contract law a conditional gift the best illustration of this is the famous hypothetical by samuel williston a well-known turn-of-the-century harvard law professor who wrote the treatise williston on contract and the picture you see on your screen is the manuscript for one of his treatises it may have been his sales treatise rather than his contracts treatise but it doesn't matter that was a lot of work when one did not have word processing software or computers to assist the court says that weavertown has more in common with williston's than it does with a promisee obliged to a third party so who's williston's well it's not charlie chaplin here dressed in his garb the term by the way is 1920s slang for a homeless man living on the streets so what is the story that professor williston told to explain conditional gifts and to contrast them with contracts it works something like this if a benevolent man says to a if you go around the corner to the clothing shop there you may purchase an overcoat on my credit no reasonable person williston says would understand that the short walk was requested as the consideration for the promise in other words that wasn't what was bargained for but in the event of the going to the shop the promisor would make him a gift the idea here is just because you are asking for something to be done before you convey a gift that doesn't mean it is not a gift because really what's being bargained for by the benevolent man and it's not a bargain at all he's not saying i'm trying to induce you to go around the corner to the clothing shop he really has no interest in this rather he is saying you have to go around the corner to the clothing shop in order to collect the gift that i am willing to give you it isn't a trade because he's not he the owner is not really getting something that he wants in return that's not a bargain that would qualify as consideration now how did that line of logic play out in weavertown weavertown's payment says the court set up a conditional gift from moran which granted weavertown access to the club level seats at heinz field and the fact that moran arranged it so that weavertown bore the initial burden of paying that year's seat licenses does not change the general character of the transaction passage of the seat licenses and the season tickets which moran ultimately did not transfer was a gift even though weavertown was paying a significant amount of money in return so what was moran's goal here was it for miranda prophet he was simply acting here as a conduit to weavertown if we blend together the stories you might think if you will come around the store to my coat shop i'll give you some season tickets and that's kind of the arrangement involved here we can think through a somewhat difficult question williston's hypothetical and again which is fairly famous in contract law is often seen as a simple case of charity where someone promised a gift but then reneged on the promise we might socially condemn reneging on a promise but there is no legal remedy for such behavior the interactions however if you think about it between moran and weavertown were much more complex than that was moran really acting charitably when he let his then employer use the seat licenses was he really intending to make a gift to his employer of giving up his rights for a year or even for longer than that the court below the trial court that got reversed in moran did find a contract and that presumes it did find consideration there what arguable consideration could have supported the trial court's position that's a challenging question so let's go back to section 71 of the restatement second of contracts what could have served as consideration on the one hand the promise or return promise must be bargained for and we might wonder was there any bargaining that went on between moran and his then employer at some point did moran just say hey i can help you out with client development and we can take our clients out to these football games we really don't know but there would we imagine there could be some sort of deal making going on that would be required you know this is a uh this is a way that moran could get himself in a better position with his employer and of course the employer could drum up business in the context of attending the steelers football games if that's true then we do have consideration that was specifically sought so maybe moran again was trying to improve his position with the company unfortunately for weavertown there was no evidence from the company about this idea that made it into the record of the case and that probably was fatal to its claim weavertown might have had a better case if it could have pointed to something and said see look in addition to we assume the payment for the seat licenses there's something independently that moran bargained for as it stands we don't have that sort of information and that brings us to the end of this lesson on consideration and specifically on conditional gifts which do not serve as consideration in the next lesson we will take a look at the pre-existing duty doctrine another reason why some contracts fail for lack of consideration

as we continue with our discussion of consideration we now turn to the topic of gift promises you may recall from an earlier lesson that we learned that contract law is not like santa claus you may also remember that a gift or a promise to give a gift is generally not enforceable through the legal system now there may be a moral obligation to follow through on a promise to give a gift but for the most part the law does not get involved with promises that are merely to give gifts that rule seems fairly straightforward and in many respects it is but as we'll see in the case we are about to discuss that is not always true sometimes drawing the line between something that's a gift and something that qualifies as consideration can be a little bit fuzzy that brings us to the case of weavertown transport leasing vs moran it involved some pittsburgh steelers season tickets and the seat licenses that were required for a person to be eligible to purchase the season tickets the issue ultimately between mr moran who was an employee at weavertown but before the story's over is not is that he received no consideration for the season tickets and seat licenses he gave to his employer because weavertown in fact never assumed his obligation or his indebtedness to the steelers and i think you'll see this was a fairly convincing argument as we dig into the facts so what happened here moran had offered to weavertown then his employer to sell his seat license fee at cost if you have ever dealt with seat licenses in a professional sports setting where the possibility exists of charging a separate seat license in addition to game tickets and this is fairly common in the national football league in particular we're dealing with a hefty chunk of change here but moran offered to sell both the seat license and the accompanying season tickets for a particular tic season to weavertown again his employer at the time so he would transfer the seat license from his name to that of weaver town if and when the steelers would permit moran to do so now we don't actually get around to that permission happening but toward the end weavertown wrote checks for 3 840 to the stadium building fund for the new stadium that was underway at the time and for license fees corresponding to four club level seats weavertown then wrote a check for five thousand eight hundred and four dollars to the steelers organization for the face value of the season tickets for the 2001 and 2002 season now how was this done as a transactional matter the checks were delivered to moran who then sent them to appropriate payees whether that was the steelers organization or the stadium building fund doesn't really matter for our purposes what does matter for our purposes is that after this particular transfer for the 01 to o2 season on may 11th moran resigned his position with weavertown so weavertown was no longer his employer and later on when weavertown said hey we want that seat license you were going to sign over to us we're going to keep the tickets because those licenses are incredibly difficult to come by moran said no i'm keeping them and this lawsuit ensued the argument that ultimately succeeded in the case which you'll see on your screen is one that involves consideration moran contends that he received no consideration for the season tickets and seat licenses due to weavertown's lack of obligation to the steelers what do we mean by that look at what the court says instead he moran argues that his arrangement with weavertown was gratuitous conditioned on weavertown standing in his place by paying the amounts due the steelers and the steelers organization for the seats in question he effectively illustrates this point by observing that if the season tickets for some reason were no longer valuable and weavertown did not want them anymore it is moran who would be obligated to the pittsburgh steelers and not weavertown so you might think to yourself how can there be a gift when thousands of dollars changed hands now we're going to have to look back at a famous contracts hypothetical to see why why was this a conditional gift and that is the term you need to remember because it comes up so frequently in contract law a conditional gift the best illustration of this is the famous hypothetical by samuel williston a well-known turn-of-the-century harvard law professor who wrote the treatise williston on contract and the picture you see on your screen is the manuscript for one of his treatises it may have been his sales treatise rather than his contracts treatise but it doesn't matter that was a lot of work when one did not have word processing software or computers to assist the court says that weavertown has more in common with williston's than it does with a promisee obliged to a third party so who's williston's well it's not charlie chaplin here dressed in his  garb the term by the way is 1920s slang for a homeless man living on the streets so what is the story that professor williston told to explain conditional gifts and to contrast them with contracts it works something like this if a benevolent man says to a if you go around the corner to the clothing shop there you may purchase an overcoat on my credit no reasonable person williston says would understand that the short walk was requested as the consideration for the promise in other words that wasn't what was bargained for but in the event of the going to the shop the promisor would make him a gift the idea here is just because you are asking for something to be done before you convey a gift that doesn't mean it is not a gift because really what's being bargained for by the benevolent man and it's not a bargain at all he's not saying i'm trying to induce you to go around the corner to the clothing shop he really has no interest in this rather he is saying you have to go around the corner to the clothing shop in order to collect the gift that i am willing to give you it isn't a trade because he's not he the owner is not really getting something that he wants in return that's not a bargain that would qualify as consideration now how did that line of logic play out in weavertown weavertown's payment says the court set up a conditional gift from moran which granted weavertown access to the club level seats at heinz field and the fact that moran arranged it so that weavertown bore the initial burden of paying that year's seat licenses does not change the general character of the transaction passage of the seat licenses and the season tickets which moran ultimately did not transfer was a gift even though weavertown was paying a significant amount of money in return so what was moran's goal here was it for miranda prophet he was simply acting here as a conduit to weavertown if we blend together the stories you might think if you will come around the store to my coat shop i'll give you some season tickets and that's kind of the arrangement involved here we can think through a somewhat difficult question williston's hypothetical and again which is fairly famous in contract law is often seen as a simple case of charity where someone promised a gift but then reneged on the promise we might socially condemn reneging on a promise but there is no legal remedy for such behavior the interactions however if you think about it between moran and weavertown were much more complex than that was moran really acting charitably when he let his then employer use the seat licenses was he really intending to make a gift to his employer of giving up his rights for a year or even for longer than that the court below the trial court that got reversed in moran did find a contract and that presumes it did find consideration there what arguable consideration could have supported the trial court's position that's a challenging question so let's go back to section 71 of the restatement second of contracts what could have served as consideration on the one hand the promise or return promise must be bargained for and we might wonder was there any bargaining that went on between moran and his then employer at some point did moran just say hey i can help you out with client development and we can take our clients out to these football games we really don't know but there would we imagine there could be some sort of deal making going on that would be required you know this is a uh this is a way that moran could get himself in a better position with his employer and of course the employer could drum up business in the context of attending the steelers football games if that's true then we do have consideration that was specifically sought so maybe moran again was trying to improve his position with the company unfortunately for weavertown there was no evidence from the company about this idea that made it into the record of the case and that probably was fatal to its claim weavertown might have had a better case if it could have pointed to something and said see look in addition to we assume the payment for the seat licenses there's something independently that moran bargained for as it stands we don't have that sort of information and that brings us to the end of this lesson on consideration and specifically on conditional gifts which do not serve as consideration in the next lesson we will take a look at the pre-existing duty doctrine another reason why some contracts fail for lack of consideration

Transcript for:Understanding Gift Promises in Law

Transcript for:
Understanding Gift Promises in Law