FACTS: Plaintiff purchased a container of fuel in December of 1995. She was later injured when the container exploded. She subsequently filed a suit in the United States District Court for damages against the alleged manufacturer, claiming the product was defectively manufactured. During the products liability action, the manufacturer filed a motion for summary judgment. In its motion, the manufacturer alleged there were no genuine issues of material fact that would otherwise warrant a trial on the facts and claimed the undisputed facts supported a judgment in its favor. While the motion was pending, the manufacturer, through its attorney’s correspondence to plaintiff’s attorney, offered plaintiff $100,000 to fully settle her claims. There was no time limit expressed in the offer.
Prior to plaintiff’s response to the offer, the District Court allowed the manufacturer’s motion for summary judgment and judgment was entered in its favor. Thereafter, plaintiff’s attorney notified the manufacturer’s attorneys that the offer of $100,000 was accepted. The manufacturer’s attorneys responded: “the moment the judge ruled in our favor and against the plaintiff, the offer of $100,000 was no longer valid.” The District Court of Appeals thereafter affirmed the judgment in manufacturer’s favor. Plaintiff then filed suit in the Circuit Court of Cook County to enforce acceptance of the settlement offer of $100,000.
ISSUE: Can the plaintiff force the manufacturer to honor its prior offer to settle for $100,000 as a binding settlement agreement despite the District Court’s and Circuit Court of Appeals’ unfavorable rulings against her? Please see page 6 for the court’s decision and rationale.
YOU BE THE JUDGE – THE DECISION
The Circuit Court of Cook County ordered the manufacturer to honor the settlement agreement and pay plaintiff $100,000, despite the fact that the defendant had prevailed in its motion for summary judgment in the underlying case. The Illinois Appellate Court affirmed. The Appellate Court ruled any act or promise that benefits one party or disadvantages the other is sufficient consideration to support the formation of a contract. A promise to forego pursuit of a legal claim will be determined to be adequate consideration to support the formation of a binding contract even if the claim is invalid, provided it is asserted in good faith. The settlement proposal constituted a binding contract of the manufacturer. Although plaintiff lost the summary judgment motion, she retained the right to seek reconsideration of that ruling and the right to seek appellate review. Her promise to compromise these rights through her attorney’s acceptance of the offer provided consideration for the offer of settlement. Therefore, the manufacturer was obligated to pay her $100,000.