North Dakota Legal Consideration

North Dakota Legal Consideration

Legal Consideration

Legal consideration with respect to a contract is something of value received by a promisor from a promisee.

Black’s Law Dictionary – second pocket edition – 2001

Legal consideration can take the form of an action, the forbearance of an action, or a return promise.

The legal consideration must be “adequate” – which is fair and reasonable under the circumstances of the agreement.

Black’s Law Dictionary – second pocket edition – 2001

North Dakota Good Legal Consideration

N.D.C.C. section 9-05-01 defines North Dakota good legal consideration for a promise made with respect to a proposed agreement as:

Any benefit conferred or agreed to be conferred upon the promisor by any other person to which the promisor is not entitled lawfully,

or

any prejudice suffered or agreed to be suffered by such person, other than such as that person, at the time of consent, is lawfully bound to suffer as an inducement to the promisor, . . . .

In 1989, the North Dakota Supreme Court cited the above provision when it declared that:

Consideration may be any benefit conferred or detriment suffered.

Estate of Jorstad, 447 N.W.2d 283 (ND 1989), citing N.D.C.C. § 9-05-01.

Refraining from doing something which one has a legal right to do is a legal detriment, and constitutes good consideration.

Estate of Jorstad, 447 N.W.2d 283 (ND 1989), citing Farmers Union Oil Co. v. Maixner, supra, 376 N.W.2d at 46.

Detriment, in the legal sense, may be sustained by the promisee by the surrender of a legal right, whether that right has substantial value or not.

Estate of Jorstad, 447 N.W.2d 283 (ND 1989), citing Gulden v. Sloan, 311 N.W.2d 568, 572 (N.D. 1981).

North Dakota Lease-Option Agreement Consideration

In 1977, the North Dakota Supreme Court declared that the legal consideration sufficient to support a North Dakota option agreement can be simultaneously supplied in the same instrument by the consideration provided for the lease component of the transaction.

Amann v. Frederick, 257 N.W.2d 436 (N.D., 1977)

North Dakota Failure of Consideration

A failure of consideration is not the same as a lack of consideration.

When there is a lack of North Dakota legal consideration, no contract is ever formed.

Farmers Union Oil Company of New England v. Maixner, 376 NW2d 43 (North Dakota 1985), citing Harrington v. Harrington, 365 NW2d 552 (North Dakota 1985).

However, when there has been a failure of North Dakota legal consideration, a North Dakota contract – which was valid when formed – becomes unenforceable because the performance bargained for has not been rendered.

Farmers Union Oil Company of New England v. Maixner, 376 NW2d 43 (North Dakota 1985), citing Franklin v. Carpenter, 309 Minn. 419, 244 NW2d 492 (1976).

Legal or Moral Obligation as North Dakota Good Legal Consideration

N.D.C.C. section 9-05-02 identifies that North Dakota good legal consideration for a mineral rights purchase offer can be provided by a legal or moral obligation:

An existing legal obligation resting upon the promisor, or a moral obligation originating in some benefit conferred upon the promisor or prejudice suffered by the promisee, also is a good consideration for a promise to an extent corresponding with the extent of the obligation, but no further or otherwise.

North Dakota Legal Consideration – Presumption

N.D.C.C. section 9-05-10 identifies that a written instrument provides presumptive evidence of North Dakota good legal consideration.

North Dakota Legal Consideration – Burden of Overcoming a Presumption

N.D.C.C. section 9-05-11 identifies the party that has the burden of overcoming a presumption of sufficient North Dakota legal consideration:

The burden of showing a want of consideration sufficient to support an instrument lies with the party seeking to invalidate or avoid it.

In 1989, the North Dakota Supreme Court cited the above provision when it declared that:

The burden of proving lack of consideration sufficient to support an instrument is upon the party seeking to invalidate the instrument.

Estate of Jorstad, 447 N.W.2d 283 (ND 1989), citing N.D.C.C. § 9-05-11.

North Dakota Legal Consideration – Questions of Law and Fact

In 1989, the North Dakota Supreme Court also declared that:

The existence of consideration is a question of law, but whether or not consideration has passed is a question of fact.

Estate of Jorstad, 447 N.W.2d 283 (ND 1989), citing Harrington v. Harrington, 365 N.W.2d 552, 555 (N.D. 1985)(existence of consideration is legal issue), Farmers Union Oil Co. v. Maixner, 376 N.W.2d 43, 47 (N.D. 1985)(whether consideration has failed is question of fact).

Conclusion – North Dakota Legal Consideration

North Dakota good legal consideration to support a North Dakota option agreement or North Dakota mineral rights purchase offer can be defined as:

Any benefit conferred or agreed to be conferred upon the promisor by any other person to which the promisor is not entitled lawfully, or any prejudice suffered or agreed to be suffered by such person, other than such as that person, at the time of consent, is lawfully bound to suffer as an inducement to the promisor, . . . .

If you need assistance with a North Dakota option agreement or North Dakota mineral rights purchase offer, please contact North Dakota attorney Gary C. Dahle, at 763-780-8390, or Gary@Dahlelaw.com.

Gary C. Dahle has represented clients from the countries of Canada, Norway, and Sweden, and the states of Alabama, Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Tennessee, Texas, Virginia, Washington, and Wisconsin in the United States, with respect to North Dakota mineral rights and probate issues in various North Dakota Counties.

Even though Minnesota and North Dakota attorney Gary C. Dahle does not maintain an office in North Dakota, he is able to assist persons throughout the United States with their North Dakota probate, real estate, and mineral rights issues which do not require a court appearance.

Attorneys not licensed in North Dakota are invited to refer the North Dakota portion of the probate estate they are associated with to Minnesota and North Dakota attorney Gary C. Dahle, at 763-780-8390, or gary@dahlelaw.com.

Minnesota and North Dakota attorney Gary C. Dahle does not represent oil companies – only owners of North Dakota mineral and royalty interests, and is currently accepting new clients with respect to North Dakota Option Agreements.

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