Davies v. Martel Laboratory Services, Inc.

Facts

Davies was an employee of Defendant Martel. Her employer told her that if she obtained her MBA degree, she would receive a salary of $40,000/yr, be a permanent employee, and be on the President’s Council. Also, Martel would contribute to 1/2 of the expenses incurred in obtaining her MBA. After one year in the MBA program at Northwestern, Davies was terminated.

Issue

Can sufficient consideration exist, where the promisee receives no disadvantage or benefits – and arguably a benefit as a result of the promise?

Holding:

Yes, Reversed and remanded.

Rule

Giving up something which immediately prior thereto the promisee was privileged to retain, or doing or refraining from doing something which he was then privileged not to do, or not to refrain from doing constitutes sufficient consideration.

Analysis

Davies was privileged to refrain from serving on Martel’s council and from pursuing an MBA degree.  She gave up a legal right not to do so, and as a result encumbered a “detriment.”  This is what is considered a legal detriment; her rights were restricts as a result of the contract.

Conclusion

“Detriment” as used in determining the sufficiency of consideration to support a contract means “`legal detriment as distinguished from detriment in fact. It means giving up something which immediately prior thereto the promisee was privileged to retain, or doing or refraining from doing something which he was then privileged not to do, or not to refrain from doing.'”

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