Business Law

Dr. James Taylor was employed as president of the University of the Cumberlands for 35 years beginning in August 1980. Over the course of a decade, the university entered into and reaffirmed a commitment to an agreement to provide Dr. Taylor and his wife, Dinah Taylor, with compensation for life following Dr. Taylor’s retirement from the position of president. The university further agreed to provide a number of retirement benefits to Dr. and Mrs. Taylor after his retirement from the presidency, including health insurance benefits, and the university agreed to provide the Taylors with a residence or apartment in Williamsburg, Kentucky, where the university is located. The agreement indicated that Dr. Taylor would served in the newly created position of chancellor for as long as he pleased and Mrs. Taylor would continue to serve as “ambassador” for the university. They had been prolific fundraisers for the university, and they agreed to continue with those efforts even after Dr. Taylor’s retirement. When Dr. Taylor retired, the Trustees reaffirmed their commitment to the agreement, but after a while they tried to  to reduce the amount of benefits owed to Dr. and Mrs. Taylor by offering Dr. Taylor a one-year renewable contract that provided for a reduced salary that was significantly less than had been provided for in the disputed agreement. Dr. Taylor refused, claiming that the university was contractually bound to the agreement to provide the benefits and pay to him and Mrs. Taylor for life. The university countered that the agreement was not enforceable as a contract because the Taylors provided no legal value for it. According to the university, the agreement was entered into solely based upon the plaintiffs’ past performance, which could not serve as valid consideration. They pointed to language in the agreement and resolution that, “The University of the Cumberlands and the Board of Trustees agree that the compensation and benefits contained in this agreement is/are for the past decades of duties and/or work performed by Dr. and Mrs. Taylor all for the benefit of The University of the Cumberlands.” Was the university correct to argue that it had no contractual obligation to the Taylors due to a lack of consideration?

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