Business Law – Contracts

LAW001 Business Law 1

Week 4 Assignment  

Past Consideration Case Problem

Law 1 – Business Law – Contracts

Chapter 13 – Past Consideration

A. Read the case Access Organics v HernandezLinks to an external site..

B. Answer the following questions in your own words.

Explain the following: “The non-compete agreement provided in relevant part: For good consideration and as an inducement for Access Organics (the Company) to employ Andy Hernandez, the undersigned Employee hereby agrees not to directly or indirectly compete with the business of the Company and it successors and assigns during the period of employment and for a period of two years following termination of employment…”

Explain the following: “Section 28-2-801, MCA, provides that “[a]ny benefit conferred or agreed to be conferred upon the promisor by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered or agreed to be suffered by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor is a good consideration for a promise.”

Explain the following: “Consideration exists if the employee enters into the non-compete agreement at the time of hiring. During pre-employment negotiations, the employee and the employer engage in a bargained-for exchange: the employer obtains the desired non-compete agreement, and in return, the employee receives employment.”

Explain the following: “However, Hernandez signed the agreement more than four months after accepting his initial employment offer from Access Organics. The record clearly shows that the agreement was not signed as part of Access Organics’s pre-employment negotiations with Hernandez.”

Explain the following: “A non-compete agreement entered into after employment will be enforced if it is supported by independent consideration . . . . Independent, additional, consideration is required for the valid formation of a modification or subsequent agreement.”

Explain the following: “We conclude that the District Court erred by finding that the continuation of Defendants’ employment, and therefore, income” sufficed as consideration. We hold that Access Organics failed to meet its burden of proof by showing that the agreement was supported by good consideration.”

Explain who won the case (actual name).