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You are here: Home1 / Contract Law2 / ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR...
Contract Law, Debtor-Creditor

ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT).

The First Department, reversing Supreme Court, determined a written guarantee to pay the debt of another was not enforceable because no consideration for the guarantee was included in the written guarantee. The 2nd Department further held that an oral guarantee would have been enforceable if it was induced by plaintiff’s promise to hold off on bringing suit.  But only plaintiff’s counsel made that argument unsupported by an affidavit from the plaintiff:

… “[N]othing” in the writing supported the plaintiff’s claim that [she] had agreed to “forbear() pursuing a claim” in exchange for the promised payments]). In the absence of such a binding promise by plaintiff, the guaranty is unenforceable for want of consideration. “Unless both parties to a contract are bound, so that either can sue the other for a breach, neither is bound” … . …

Case law has established that an oral promise to guarantee the debt of another may be enforced, notwithstanding General Obligations Law § 5-701(a)(2), if the plaintiff “prove[s the promise] is supported by new consideration moving to the promisor and beneficial to him and that the promisor has become in the intention of the parties a principal debtor primarily liable” … . Thus, plaintiff could enforce [the] guaranty if she could prove, through parol evidence, that he gave her the guaranty in exchange for her unwritten promise to forbear from suing him until the due date of the guaranty, which would constitute new consideration beneficial to him. Plaintiff fails, however, to offer any admissible evidence (as opposed to unsupported assertions by her counsel) that she actually made such a promise. Reddy v Mihos, 2018 NY Slip Op 02565, First Dept 4-17-18

​CONTRACT LAW (GUARANTEE, ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT))/DEBTOR-CREDITOR (CONTRACT LAW, GUARANTEE,  ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT))/GUARANTEE (CONTRACT LAW, ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT))/CONSIDERATION (CONTRACT LAW, GUARANTEE,  ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT))

April 17, 2018
Tags: First Department
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