On Feb. 14, 2013, the Court of Appeals handed down opinions in two cases, Schron v. Troutman Saunders1 (sic) and Fundamental Long Term Care Holdings v. Cammeby’s Funding,2 involving many of the same parties. The court addressed agreements where an option was granted in return for consideration that included "other good and valuable consideration." An issue in the cases was whether the court could consider extrinsic evidence to give meaning to this phrase.
The decisions reiterate points of contract law applicable to transactions involving sophisticated, counseled parties: when it is clear that some consideration has been provided (i) a court will not concern itself with the adequacy of the consideration or the fairness of the exchange; (ii) a court will not look at extrinsic evidence to determine what the parties intended as the additional "other good and valuable consideration" noted in their contract; and (iii) if a sophisticated, counseled party wants to condition its obligation to perform upon some performance or forbearance by the other party, it should specifically say so in the agreement.
