Case-promise to pay retirement benefits


Case Problem:

Brads became pastor of the First Baptist Church in January 1958. In June 1971, Brads had a heart attack. While he was recuperating, an officer of the church told Brads that the church had voted to pay his full salary for the remainder of his lifetime. That promise was unperformed because Brads later recovered and returned to work. In April 1980, Brads again had heart problems. On the advice of his doctor, Brads approached the deacons of the church about retirement. Brads proposed that his salary be reduced after retirement through a series of gradual step-downs to an amount approximately one-third the salary he was then receiving. Brads’s proposal was accepted by the deacons. Under the terms of the agreement, the church placed Brads on disability retirement status, conferred an honorary title on him, gave him office space in the church, and allotted him retirement benefits according to the step-down schedule. Brads was required to aid, assist, and advise whomever the church called as a new pastor, to the extent Brads’s health would allow. Brads and the church deacons jointly recommended to the congregation that it adopt the agreement, which the congregation did, unanimously. Brads then left his position as pastor and his benefits commenced. In 1985, the congregation was advised by a church officer that the benefits paid to Brads under the 1980 agreement should continue for Brads’s lifetime. The congregation once again unanimously approved and reaffirmed theagreement. Brads received his benefits from 1980 through early July 1990, when he was notified by church officials that he had been dismissed from the membership of the church and that no more payments would be made to him. Other benefits, such as free office space, were also discontinued. Brads sued the church, contending that it breached its contract. The church contended that there was no consideration to support its promise to pay retirement benefits to Brads for life. Is the church correct?

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Business Law and Ethics: Case-promise to pay retirement benefits
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