Opinion ID: 1176472
Heading Depth: 3
Heading Rank: 4

Heading: The Making of the Contract A Bargained-for Consideration

Text: Although we do not reject the Hoffman doctrine, we disagree with the court of appeals' application of Restatement § 90 in this case. We note that even the Wisconsin Supreme Court has refused to expand § 90 in the direction the court of appeals has suggested. See Rossow Oil Co., Inc. v. Heiman, 72 Wis.2d 696, 242 N.W.2d 176 (1976). Moreover, we decline to retry the factual issues that were resolved in Schade's favor at trial. This court will not set aside the trial court's findings of fact unless they are clearly erroneous. See Rule 52(a), Ariz.R.Civ.P., 16 A.R.S.; State ex rel. LaSota v. Arizona Licensed Beverage Association, 128 Ariz. 515, 627 P.2d 666 (1981). The trial court found that [T]here were a number of oral conversations among Schade, Diethrich and Diethrich's attorney and agent Paul Meyer culminating in an offer made to Schade by Diethrich that if Schade would resign his employment with both Defendants and the International Heart Foundation effective immediately, Schade would receive fair and equitable severance benefits based on his tireless service of 10 1/2 years and his unique contributions, that an unbiased committee would be appointed to make recommendations as to the amount of fair and equitable severance benefits and Schade would continue to work toward presenting the International Cardiovascular Congress IV. Finding of Fact No. 8. Schade accepted the Defendants' offer and resigned his employment with both Defendants and the [Institute], upon the terms agreed upon with Diethrich. Finding of Fact No. 9. The record facts support the trial court's finding that there was a valid offer and a valid acceptance. See Restatement § 22 (the formation of a contract requires a bargain in which there is a manifestation of mutual assent and a consideration). We turn then to the question of consideration to support the bargain. To constitute consideration, a performance or a return promise must be bargained for. Restatement § 71(1). See also Carroll v. Lee, 148 Ariz. 10, 712 P.2d 923 (1986). A performance or return promise is bargained for if sought or given in exchange for the promise of the other party. Restatement § 71(2). Monetary gain is not always required as consideration. Carroll. The facts clearly show that Diethrich made his promise of a fair and equitable severance agreement to Schade with the expectation that Schade would fulfill his promise to resign and to continue work on the Congress. Schade's promises were consideration to Diethrich for two reasons. First, Schade's resignation enabled Diethrich to avoid the bitter debate that might have ensued with Schade's supporters on the Foundation's board over the sudden firing of an outstanding employee. Second, Schade's promise to continue work helped ensure the success of the Congress, one of Diethrich's projects. According to Schade, Diethrich's promises of severance pay were what induced him to submit his resignation and then continue working. [8] Thus, Schade and Diethrich each bargained for and supplied the requisite consideration. See Hirsch v. Associated Amusement Machine Operators, 205 Misc. 105, 127 N.Y.S.2d 82 (1953) (submission of employee's resignation sufficient consideration for the promise to pay severance benefits); Twohy v. Harris, 194 Va. 69, 72 S.E.2d 329 (1952) (employee's promise to remain in employ of defendant employer valid consideration for the promise to pay severance benefits). We thus find in the Diethrich-Schade agreement two of the requisites of making a contract  a bargain, consisting of promises exchanged, and consideration. Diethrich argued and the court of appeals agreed, however, that the agreement was nevertheless unenforceable for lack of certainty. The parties agree that the details of a fair and equitable severance package were unresolved when they concluded their agreement on the night of November 17, 1982. However, this was the only provision of a multi-term agreement that was uncertain and left for later resolution. We believe that the requirement of certainty is not so much a contractual validator as a factor relevant to determining the ultimate element of contract formation  the question whether the parties manifested assent or intent to be bound.