The blood in which a Korean businessman wrote a contract with an investor was “not weightier than a peppercorn,” a California appeals court has ruled in finding the contract an unenforceable “gratuitous promise.”

Jinsoo Kim quoted an 1863 decision in arguing that the contract should be given extra weight because Stephen Son wrote it in his blood. In Hobbs v. Duff, 23 Cal. 596, the California Supreme Court suggested that even “[a] peppercorn” could amount to “valuable consideration” in a contract.

“Blood may be thicker than water, but here it's far weightier than a peppercorn,” Kim said in the opening line of his appellate brief.

Son wrote the contract during an alcohol-fueled meeting in a bar, agreeing to pay back $170,000 that Kim had invested in or loaned to two companies he controlled. “Sir, please forgive me,” it said. “Because of my deeds you have suffered financially. I will repay you to the best of my ability.”

Kim argued that his “forbearance” in waiting more than a year to sue Son for breach of contract and fraud was adequate consideration. But in an unpublished opinion, the 4th District Court of Appeal called the suit “meritless” and affirmed a trial judge who declared the contract unenforceable.

“Forbearance to sue cannot supply consideration to what the trial court determined was an invalid claim,” Justice Kathleen E. O'Leary wrote for the court. “In the context of this contract dispute, Son's blood was not weightier than a peppercorn.”

Son was the majority shareholder in a South Korean company, MJ, Inc., and the sole owner of a California corporation, Netouch International. Kim invested $100,000 in MJ and later loaned it $30,000; he also loaned $40,000 to Netouch.

O'Leary found the blood-written contract was “wholly invalid” because “There was no evidence these investments or loans were personally guaranteed by Son ... Consequently, any debt collection or breach of contract claim Kim may have had against the corporations could not be legally imputed to Son, individually. In other words, Kim's forbearance in filing a meritless lawsuit cannot supply adequate consideration for Son's gratuitous promise.”

In the appellate brief, Kim attorney Richard J. Radcliffe wrote that the “unusual” circumstances of the case “should not obstruct the conventional legal doctrine -- applicable to all contracts -- that even a peppercorn is sufficient to constitute consideration.”

“The consideration in this case far exceeds a mere peppercorn,” he continued. “Forbearance has been recognized as sufficient consideration in California law for many decades and can be satisfied by a delay of even one day.”

By Matthew Heller
3/10/09