Jentz-11e: Case Problem with Sample Answer
Chapter 12: Consideration
12–6. Case Problem with Sample Answer
As a child, Martha Carr had once visited her mother’s 108-acre tract of unimproved land in Richland County, South Carolina. In 1968, Betty and Raymond Campbell leased the land. Carr, a resident of New York, was diagnosed as having schizophrenia and depression in 1986, was hospitalized five or six times, and has since taken prescription drugs for the illnesses. In 1996, Carr inherited the Richland property and, two years later, contacted the Campbells about selling the land. Carr asked Betty about the value of the land, and Betty said that the county tax assessor had determined that the land’s agricultural value was $54,000. The Campbells knew at the time that the county had assessed the total property value at $103,700 for tax purposes. A real estate appraiser found that the real market value of the property was $162,000. On August 6, Carr signed a contract to sell the land to the Campbells for $54,000. Believing the price to be unfair, however, Carr did not deliver the deed. The Campbells filed a suit in a South Carolina state court against Carr, seeking specific performance of the contract. At trial, an expert real estate appraiser testified the real market value of the property was $162,000 at the time of the contract. Under what circumstances will a court examine the adequacy of consideration? Are those circumstances present in this case? Should the court enforce the contract between Carr and the Campbells? Explain. [Campbell v. Carr, 361 S.C. 258, 603 S.E.2d 625 (App. 2004)]
Sample Answer:
Adequacy of consideration relates to the fairness of a bargain—“how much” consideration is given. Generally, a court will not question the adequacy of consideration if it is legally sufficient—something of legal value, regardless of “how much” it is. A court may review adequacy, however, if the amount or worth of consideration is so low as to indicate fraud, duress, undue influence, the lack of a bargained-for exchange, or the lack of a party’s contractual capacity. In Carr’s case, the consideration in the contract was grossly inadequate—the sales price was significantly below the assessor’s computed fair market value and the estimated real market value. The Campbells knew the real value of the land, having leased it for thirty years, whereas Carr, a New York resident, had visited the property only once and was unaware of its value. The inadequate consideration combined with Carr’s schizophrenia and depression would make it unfair to order specific performance.