What’s On Their Minds? Is Resuming a Relationship Adequate Consideration for a Contract? Williams v. Ormsby.

     Update: The merit decision in this case was handed down on February 23, 2012.  Read the analysis here. 

On September 20 the high court heard oral argument in Williams v. Ormsby. #10-1946. The issue in the case is whether resumption of a couple’s relationship can be sufficient consideration to support an enforceable contract.  For a further overview of the case, see the oral argument preview.

      Counsel for Ormsby stayed on message that Ohio has never accepted love and affection as consideration for a contract and should not now.  He argued the Ninth District Court of Appeals was wrong to rely on a New Jersey decision based on palimony.  Don’t go down that road, he cautioned.

      Counsel for Williams also stayed on message that this was a valid, binding, written agreement, recorded for all the world to see, entered into voluntarily by two adults who knew what they were doing.

Messy Facts, Different Agreements

     The justices spent a lot of time trying to straighten out the key points of the three different agreements between the parties—the December 2004 deed of the property from Williams to Ormsby in consideration for his paying off the mortgage, the March 2005 contract to sell the house and give Ormsby the first $324,000 of the net proceeds, with any excess going to Williams, and the June 2005 contract in which Williams agreed to move back into the house and resume their relationship if Ormsby would give her an equal share in the property.

      Justice Cupp asked specifically about the differences between the two 2005 contracts. He asked how long the relationship continued after the parties executed the June contract.

      Justice McGee Brown noted that the March contract had specific duties that the lJune contract did not.

     Justice Pfeifer asked if the whole thing was smoke and mirrors.

      Chief Justice O’Connor pressed about the differences among the agreements, noting that Williams initially gave the property to Ormsby for relieving her of a $310,000 mortgage, and not out of any love and affection consideration. And wasn’t Williams entitled to live in the house anyway after the parties executed the March 2005 agreement? So even if the June 2005 contract were found to lack consideration, wasn’t she legally entitled to still be in the house?

 Palimony?

     Not a single justice asked about this, although Justice Stratton noted that Ohio does not recognize it, or common law marriage, either.

 A gift?

    Justice Pfeifer asked the difference between a contract and a gift, wondering aloud if Ormsby hadn’t just gifted Williams half the house?  But Justice O’Donnell asked whether there was any donative intent or delivery of the deed?

 Really, do we want courts evaluating the adequacy of the consideration?

   Justice McGee Brown asked with a chuckle that if the Court were to consider love and affection as consideration, whether the trier of fact would have to evaluate the quality of the relationship?

      Justice Lanzinger wondered if specific promises, such as promising to cook and clean, could serve as consideration rather than the considerably more amorphous love and affection. Or did this kind of case have to involve monetary consideration?

      Justice Cupp wondered whether if the relationship failed after the June 2005 agreement, that itself was a failure of consideration?

      Justice Pfeifer asked if there was any point at which the June agreement would have become binding?

 Why does it matter that that this was in writing?

     Justice Stratton asked Williams’ lawyer if he wasn’t confusing the fact that the contract was in writing with what was actually written in the contract. If love and affection are valid consideration, does it really matter whether the contract it was oral or written?

Where are the parties if the June 2005 contract is invalidated?

     Justice Stratton was particularly interested in this question.  She asked if Williams might have a claim for equitable restitution?  Or would the March 2005 contract be revived if the court invalidated the June 2005 agreement?

 How it Looks from the Bleachers

     While none of the justices seemed bent out of shape that an appeals court had found that love and affection constituted consideration for a contract, they seem unlikely to accept that argument as a general propostion of law.  In this case, with its very messy facts, if the Court invalidates the June 2005 contract for want of consideration, it is likely to find the March 2005 contract is valid and still in effect, and will govern the asset distribution between the parties when the house is sold.

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