There are say two parties – one wants a service performing and the other wants to perform that service. So far so good. The party wanting the service performing contracts the other to perform the service and that party agrees. Done deal! Contract in operation…or is it?
Well no actually it isn’t because the agreement above is lacking something called “consideration” and no matter how valueless the “consideration” may appear if the parties agree that one party will supply something to the other party for a “consideration” only then is a contract in force.
Take the unpaid bloggers at The Huffington Post. There are thousands of them who supply this news site with content to their site without getting a “consideration”. Nowhere in The Huffington Post’s T&Cs does it mention consideration, fee, compensation or the like.
Notwithstanding this a group of The Huffington Post brought a class action lawsuit against AOL Inc after they had agreed to acquire the news site for $315 million. Amongst other allegations in the lawsuit which related the bloggers being deceived they alleged that the news site was unjustly enriched by the revenue the bloggers brought them with their posts. Another part of the lawsuit alleged that The Huffington Post didn’t accept blog posts willy-nilly but actively sought out good bloggers and carefully selected others, i.e. recruited the bloggers to perform services for it.
Well not surprisingly the lawsuit was dismissed by U.S. District Judge Koeltl who ruled that, “No one forced the plaintiff to give their work to The Huffington Post for publication and the plaintiffs candidly admit they did not expect compensation.” The Judge added that, “they repeatedly agreed to the same bargain and went into the arrangement with eyes wide open.”
However they were receiving some compensation according to Judge Koeltl – they were getting publication which in itself makes the contract valid between The Huffington Post and the bloggers. The bloggers were supplying the content, The Huffington Post was getting the content and the bloggers got their content published.
As Lord Somervell noted in Chappell v Nestlé, “A peppercorn does not cease to be good consideration if it is established that the promise does not like pepper and will throw away the corn.”