Thomas Wendof signed an agreement with his son Nathan. Thomas agreed that during

Question

Thomas Wendof signed an agreement with his son Nathan. Thomas agreed that during his lifetime he would not sell any of his shares of stock in his company without giving Nathan an opportunity to buy the stock. On Thomas's death, under the agreement, Nathan had the option to buy Thomas's stock. The agreement stated that the consideration for the contract was $10. along with Nathan's agreement to remain chief executive officer (CEO) of the company. Nathan did continue to serve in that capacity. When Thomas died, Nathan gave notice that he intended to buy the stock. One of the beneficiaries under Thomas's will sued, claiming that he was entitled, as an heir, to the stock because there was no consideration for Thomas's promise to Nathan. How should the court rule?

Explanation / Answer

Generally for all valid contracts, there is a consideration. A consideration can be both monetary and non-monetary benefit. Here in this case, as per the contract, Nathan has to remain the CEO of the company to comply with the agreement between them. Therefore, remaining CEO for the company is a non-monetary consideration for the contract.

Therefore, claims of Thomas’s heirs will be straightaway rejected by the court and Nathan could buy the stocks of Thomas.

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