Contract; formation; consideration; agreement to compromise as consideration.
Facts: Ballantyne was Phillott's mistress for many years. During this time he gave her large sums of money. After they quarrelled, he began legal proceedings to recover the money, saying it had been a loan, not a gift. She denied this, saying it had been a gift. Before the trial, the parties met and discussed their differences. Phillott then signed a document which stated:
(1) that he would discontinue the legal action against Ballantyne;
(2) that he gave up all rights and claims against her; and (3) that Ballantyne had no rights or claims against Phillott.
Although in writing, the agreement was not in the form of a deed, and consideration was needed for it to be enforceable.
Issue: Had Ballantyne provided consideration to Phillott in exchange for his promises?
Decision: In a majority decision, it was held that Ballantyne had not given anything in exchange for Phillott's promise to discontinue his claims.
Reason: The document simply stated that Ballantyne had no rights. She did not actually give up any legal rights or claims. The agreement was not a genuine compromise of competing claims, but a unilateral abandonment by Phillott of his rights, for which he received no consideration.