With few exceptions, companies can uphold acknowledged contracts, especially if they have acted independently of any guarantee. In rare cases, organizations are not obligated to sue donors and should consider the long-term and short-term impacts of a lawsuit before doing so. Failing to enforce a contract can potentially cause harm. The Board should carefully document any decisions not to enforce a promise in its minutes or resolution (Adamson, 2008). If a patron decides to enforce a promise, the case will be treated similar to a typical breach of contract action, following the provisions that courts often reference. In Florida, for example, the Supreme Court has made it difficult to recover charitable promises.
The following is the statement made in the case of Mt. Sinai Hospital v. Jordan: "In light of and to initiat
...e the memberships of others, I guarantee to pay . . ." The donor had paid $20,000 during their lifetime out of a total of $100,000. The procurer sued the estate for the remaining $80,000(Adamson, 2008). Without any claim of dependence, it was determined that the pledge was not enforceable. It was simply an unwarranted guarantee of a future gift, without consideration. Alternatively, the promise could be seen as an offer, contingent upon acceptance once the intended work has been completed or at least initiated. In this case, any liability would be caused by the work done on the reliance of the membership.
Construing the promise as an offer, it must follow that if no work has been done or risk caused, it must expire at the demise of the offeror. Thus, the case was held by the Supreme Court of Florida, and similar outcomes
have been reached in several other states, as noted in an ALR Annotation. Additionally, in Lowa, two prominent cases in the Supreme Court have deemed generous promises authoritative and enforceable without any proof of reliance (International Business Publications, 2008). In the subsequent case from the Lowa Court of Appeals, it was determined that even oral vows are also enforceable.
The reiteration of contracts has become clear in terms of enforceability without the requirement of proving relationship: "A charitable promise ... is binding ... without proof that the promise caused action or non-action." (Casenotes, 2007) In Louisiana, charitable pledges are legally binding. In the first relevant case, Louisiana College v. Keller, the defendant pledged $500 to a new school to be established (Casenotes, 2007).
The school filed a lawsuit when the donor refused to fulfill his membership commitment. The Supreme court upheld the validity of the promise, ruling that lack of mutuality and consideration was not a barrier: “However, the respondent attempts to avoid paying the amount he pledged, claiming that his promise was made without consideration and is not binding on him” (International Business Publications, 2008). According to the Code, an obligation is still binding even if its motive or cause is not specified. We are not informed about the consideration for this promise based on the documents. It could have been the benefit the respondent expected to receive from having a school near his home, saving him significant expenses in educating his children, or it might have been a spirit of generosity and a desire to be recognized as a patron of education (Casenotes, 2007).
There is nothing unlawful or prohibited by law in whatever it may
have been. If he consented publicly and the agreement had a legitimate question, he is bound by the guarantee.
References
- Adamson, J. E. (2008). Law for business and personal use. Mason, OH: South-Western Cengage Learning.
- Casenotes, (2007). Contracts, keyed to calamari, Perillo; bender. Place of publication not identified: Kluwer Law International.
- International Business Publications, USA. (2008). United States Company Laws and Regulations Handbook.
Intl Business Pubns USA.
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