24. If the collector refuses to pay the investigator anything, and he sues her for $25,000, what is the probable result under the prevailing modern rule?

A burglar stole a collector's impressionist painting valued at $400,000. The collector, who had insured the painting for $300,000 with an insurance company, promised to pay $25,000 to a full-time investigator for the insurance company if he effected the return of the painting to her in good condition. By company rules, the insurance company permits its investigators to accept and retain rewards from policyholders for the recovery of insured property. The investigator, by long and skillful detective work, recovered the picture and returned it undamaged to the collector.

The collector wins, because the investigator owed the insurance company a preexisting duty to recover the picture if possible
The collector wins, because the insurance company, the investigator's employer, had a preexisting duty to return the recovered painting to the collector
The investigator wins, because the collector will benefit more from return of the $400,000 painting than from receiving the $300,000 policy proceeds
The investigator wins, because the preexisting duty rule does not apply if the promisee's (the investigator's) duty was owed to a third person

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A promise is supported by consideration if two things are true: (i) the promisee is giving up something of value or somehow circumscribes his liberty to suffer a legal detriment; and (ii) the promisor makes a promise as part of a bargained-for exchange for the promisee's legal detriment.

Under the pre-existing duty rule, if a party does or promises to do what he is already legally obligated to do, or if he forebears or promises to forebear from doing something which he is not legally entitled to do, he has not incurred the kind of legal detriment necessary to constitute consideration.

An exception to the pre-existing duty rule arises when a pre-existing legal duty was owed to a third party. Traditionally, when a pre-existing duty was owed to a third party, a new promise to perform the same duty would not constitute consideration. However, under the prevailing modern rule, the new promise WILL constitute consideration when the original promise was owed to a third party.

D is correct. The investigator's performance of effecting the return of the painting to the collector was sufficient consideration to support her promise to pay the investigator $25,000 because the pre-existing duty was owed to the insurance company (a third party), not to the collector.

A is incorrect. This answer states what the result would be if the traditional pre-existing duty doctrine applied to the question's fact pattern. However, the call of this question requires an analysis of the modern interpretation of the pre-existing duty doctrine, which provides an exception for situations where the duty is owed to a third party.

B is incorrect. The insurance company was hired by the collector to find the painting, and the insurance company hired the investigator specifically to effectuate this task. The fact that the insurance company is also obligated is not relevant to whether the investigator furnished sufficient consideration.

C is incorrect. The extent to which the collector will benefit is not relevant to whether the investigator furnished sufficient consideration.

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24. If the collector refuses to pay the investigator anything, and he sues her for $25,000, what is the probable result under the prevailing modern rule?

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