Legal Memorandum: Revocable Offer without Consideration

Issue: Under the laws of the state of Minnesota, if a written agreement is not a formed contract, but simply a revocable offer without consideration, does the offer become accepted and enforceable where it is not withdrawn?

Corbin makes it clear that:

[i]f the consideration is nominal in fact as well as in amount (that is, it is merely named and is in fact neither given nor promised), there is no consideration at all.  In that case, it has therefore been held been held that the option giver has a power of revocation as in the case of other revocable offers.

3 Eric Mills Holmes, Corbin on Contracts § 11.7 at 509-10 (rev. ed. 1996) (emphasis added) [hereafter Corbin]; see also id. § 11.8 at 516-17.  In effect, an option that fails because of false nominal consideration becomes a revocable "offer by default."  Park-Lake Car Wash, Inc. v. Springer, 352 N.W.2d 409, 412 (Minn. 1984); Morrison, 181 N.W. at 946.  Even false recitals of consideration have sometimes been held sufficient to render irrevocable as a regular, accepted offer an agreement that falls short of the criteria needed to make it an enforceable option.  Corbin, supra, § 11.7 at 509.

Such an "offer by default" can be withdrawn only if the offeror revokes before the offeree accepts it.  Id. § 11.8 at 516-17, 523.  For example, in Kelley v. Coldren, 290 S.W.2d 424 (Ark. 1956), where the $1.00 consideration recited in the agreement was never transferred, the court found there was a revocable offer that was accepted by the plaintiffs before its […]