Batsakis v. Demotsis Case Brief by Mythri


									Batsakis v. Demotsis 226 S.W.2d 673 (Tex.Civ.App.-El Paso 1949)



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Demotsis was caught in Greece during WWII and borrows 500,000 drachma (aka $25) from Batsaki, until she could get money from America. She signed an IOU and an agreement to pay $2000 plus 8% interest. At some point. Demotsis declares that there was a wanton failure of consideration, and offered $25 plus interest. Batsakis wanted all the money and sued. Trial Court found for Batsakis and ordered Demotsis to pay $750 plus interest. o Where did the Trial Court come up with $750? Demotsis appealed on the basis of lack of consideration. US Supreme Court affirmed the decision. o Court found that "mere inadequacy of a consideration will not void the contract."  Basically that means that just because the bargain is unfair, that doesn't mean that the contract should be invalid.  The Court will not inquire into the adequacy of consideration.  This has become a very accepted proposition in Contract Law.  This case had a very different result than Fischer v. Union Trust Co. In that case, the Court found that if the deal was very lopsided, it did not constitute consideration. o In some jurisdictions, charging more than a certain % interest is illegal (usury laws). This was over 2000% interest. If there was a usury law in effect, there could have been a basis to make the contract illegal. o One reason a contract can be void is if it is made under duress. Was Demotsis, who was fleeing a Nazi invasion under duress?  Batsakis was not putting her under duress, is there a difference between whether the reason for duress has to do with one of the people

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involved in the contract? Would Batsakis' behavior count as price gouging?  If there is a limited supply, raising prices will mean only people who really want it, and have a lot of money can get it. But, in economic terms, more people would supply the item, so more people would be able to get the item.

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