Summary of Batsakis(Pl/ant) v. Demotsis (Df/ee)
Sup. Ct. Penn.1977
Adequacy of Consideration
Relevant Facts: Pl gave to the df 500,000 drachmaes in exchange for the future payment of $2000 U.S. dollars, plus 8% per annum. The df could not, because of the situation around WWII, get to her money. At the time 500000 drachmaes was only worth $25 U.S. dollars.
Legal Issue(s): Whether the consideration was legally adequate to constitute a legally binding contract?
Court’s Holding: Yes
Procedure: Trial Ct. w/o a jury granted judgment to Pl for $750 plus 8% per annum from April 1942; $1,163.83.Pl appeal.Judgment for Pl against df for $2000, plus 8% from April 1942 until entry of judgment, plus 6% thereafter.Reformed and affirmed.
Law or Rule(s): Courts will inquire into the sufficiency of the consideration, but not the adequacy of the consideration.
Court Rationale: The trial court’s failure to enter judgment for the whole unpaid balance of the principle of the instrument with interest was error. Df testified she received the 500000 drachmas, and that she signed the instrument in question. Her testimony shows that the understanding of the parties was that PL would give her the drachmas if she signed the instrument. The transaction amounted to a sale of 500000 drachmas in consideration of the execution of the instrument by the df. The drachmas had value, as the trial ct. established as fact. $750. Df got exactly what she contracted for according to her own testimony. Mere inadequacy of consideration will not void a contract.
Plaintiff’s Argument: Df signed an instrument exchanging a promise to pay $2000 plus 8% per annum for 500000 drachmas.
Defendant’s Argument: 500000 drachmas is only valued at $25 dollars, df never received the agreed upon $2000, the actual consideration.