Browning v. Johnson
70 Wash. 2d 145, 422 P.2d 314 (1967)
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Rule of Law:
The surrender of or forbearance from asserting a legal claim, which is believed in good faith to be valid by the parties at the time of their agreement, constitutes legally sufficient consideration to support a contract, even if the claim is later determined to be unenforceable.
Facts:
- Dr. Browning and Dr. Johnson entered into a contract for Browning to sell his osteopathic practice and equipment to Johnson.
- At the time of contracting, both parties and their attorneys believed the sale contract was valid and enforceable.
- Before the contract's effective date, Browning changed his mind and decided he no longer wanted to sell his practice.
- Browning promised to pay Johnson $40,000 in exchange for Johnson agreeing to cancel the original contract of sale.
- Relying on Browning's promise, Johnson agreed, and the parties executed a second contract to cancel the first one.
- Several months later, Browning refused to pay the promised $40,000.
Procedural Posture:
- Browning initiated an action in trial court for declaratory judgment and restitution against Johnson.
- The trial court concluded that the original contract of sale was unenforceable due to lack of mutuality and indefiniteness.
- Despite the unenforceability of the first contract, the trial court ruled that the second contract (the cancellation agreement) was supported by adequate consideration and was valid.
- Browning, as appellant, appealed the trial court's decision to the Supreme Court of Washington.
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Issue:
Is the surrender of a legally unenforceable contract sufficient consideration to support a promise to pay for that surrender, when both parties believed the contract was valid at the time of the agreement?
Opinions:
Majority - Langenbach, J.
Yes. The surrender of a legally unenforceable contract is sufficient consideration to support a promise to pay for that surrender when both parties believed the contract was valid at the time of the agreement. The court distinguishes between the 'adequacy' of consideration, which it will not investigate, and the 'sufficiency' of consideration. Sufficient consideration exists if the promisee incurs a legal detriment at the promisor's request. A legal detriment is defined as giving up something one was previously privileged to retain. Here, Johnson, the promisee, incurred a detriment by giving up his right to attempt to enforce the original sale contract, a right both parties believed he possessed at the time. Browning, the promisor, received the benefit he bargained for: release from the potential obligation and litigation. The court will not allow a promisor to avoid a freely bargained-for exchange simply because subsequent events reveal the consideration was less valuable than originally thought.
Analysis:
This decision reinforces the fundamental contract principle that courts generally do not inquire into the adequacy of consideration, focusing instead on its legal sufficiency. It solidifies the rule that forbearance from suing on a claim or surrendering a contractual right constitutes valid consideration, provided the claim is asserted in good faith. This precedent strengthens the finality of settlement and cancellation agreements, preventing parties from rescinding them by later challenging the validity of the underlying dispute they sought to resolve.
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