I’d previously heard about this story but I didn’t think it had much bearing on what I do—my notion of what falls under the rubric “contract drafting” isn’t broad enough to include handy hints about how to write a contract in blood. But in the spirit of a preacher who starts a sermon with some highly topical tidbit but winds it up with an all-too-familiar homily, I found an angle I could work.
Here’s the gist of the story: Mr. Kim lent $140,000 to companies run by Mr. Son. The companies subsequently went belly-up. In 2004, after some drinking, Son agreed to repay Kim his money, borrowed a safety pin from a waiter, and in his own blood wrote out, in Korean, the following: “Sir, forgive me. Because of my deeds, you have suffered financially. I will repay you to the best of my ability.”
On June 25th, Superior Court Judge Corey S. Cramin of Orange County Superior Court held that the money had been lent to the companies, not Son personally; he wasn’t required to guarantee those transactions and his promise to do so was not a binding contract. “The court will refuse to enforce a gratuitous contract,” the judge wrote, “even when it’s written in blood.”
But let’s imagine that a third person was at that cheery boozefest, namely Conventional Wisdom, Esq., known to her friends as Connie. She had landed Kim as a client and was eager to prove her worth. She had a vague recollection of her contracts class in law school, so after Son had jabbed himself with the safety pin and had groggily started writing out his promise, Connie leaned over to Kim and said, “Hey, there’s no consideration for his promise! Make him write out a traditional recital of consideration! That’ll fix it!”
Kim, by now thoroughly in his cups, looked blank, but Connie took control of the situation and started dictating to Son a traditional recital of consideration: “OK, Mr. Son, start with ‘NOW THEREFORE, in consideration of the premises … No! Use all capitals for the first two words! No, its not ‘promises,’ but ‘premises’!” By the time they were done, fifteen minutes later, Son was getting rather belligerent, as the recital of consideration was considerably longer than his promise and he had expended more blood than he had anticipated.
Thus enhanced by the traditional recital of consideration, the contract ended up in front of Judge Cramin. Coincidentally, he had just finished rereading for the sixth time Ken Adams’s Business Law Today article on the recital of consideration, so it took him all of thirty seconds to declare that the traditional recital of consideration was entirely useless and the contract invalid—you cannot create consideration where there was none just by saying so.
That evening found Connie and Kim back at the same bar. Except this time, it was Connie who could be found disconsolately holding a safety pin in one hand and poking at a piece of paper with the index finder of the other, writing the following: “Dear Mr. Kim: I promise to repay you your retainer …”