Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

Exercise 17

Barfield v. Commerce Bank, N.A. a
United States Court of Appeals, Tenth Circuit, 2007. 484 F.3d 1276.
www.kscourts.org/ca10 b
• Background and Facts Chris Barfield, an African American man, entered a branch of Commerce Bank, N.A., in Wichita, Kansas, and requested change for a $50 bill. He was refused change on the ground that he did not have an account with the bank. The next day, Chris Barfield's father, James Barfield, asked a white friend, John Polson, to make the same request at the bank. The teller gave Polson change without asking whether he had an account. A few minutes later, James Barfield entered the bank, asked for change for a $100 bill, and was told that he could not be given change unless he was an account holder. The Barfields filed a suit in a federal district court against Commerce Bank, alleging discrimination on the basis of race in the impairment of their ability to contract. The court granted the bank's motion to dismiss the suit for failure to state a claim. The Barfields appealed this ruling to the U.S. Court of Appeals for the Tenth Circuit.
a. N.A. is an abbreviation for National Association.
b. In the first paragraph, click on "plaintiff/defendant case name." In the result, scroll through the list to the name of the case and click on it to access the opinion. Washburn University School of Law Library in Topeka, Kansas, maintains this Web site.
McCONNELL, Circuit Judge.
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Originally enacted in the wake of the Civil War, [42 U.S.C.] Section 1981(a) states:
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts * * * as is enjoyed by white citizens * * *.
As part of the Civil Rights Act of 1991, Congress added part b to the statute: "For purposes of this section, the term 'make and enforce contracts' includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship." The purpose of part b was to expand the statute to encompass all phases and incidents of the contractual relationship.
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All courts to have addressed the issue have held that a customer's offer to do business in a retail setting qualifies as a phase and incident of the contractual relationship * * *. [W]hen a merchant denies service or outright refuses to engage in business with a consumer attempting to contract with the merchant, that is a violation of Section 1981.
The question, then, is whether the Barfields' proposal to exchange money at a bank is a contract offer in the same way as an offer to purchase doughnuts or apple juice. The claim made by the appellees [Commerce Bank], and accepted by the district court, is that the Barfields'proposed exchange was not a contract because it involved no consideration:"The bank would not have received any benefit or incurred a detriment if it had agreed to change the Barfields' bills." That reasoning, however, departs in several significant ways from our understanding of contract law.
* * * A contract must be supported by consideration in order to be enforceable. Consideration is defined as some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other. A promise is without consideration when the promise is given by one party to another without anything being bargained for and given in exchange for it. [Emphasis added.]
In the most straightforward sense, the transaction proposed by the Barfields was a contract of exchange: they would give up something of value (a large-denomination bill) in exchange for something they valued more (smaller-denomination bills). It is hard to see why this is not a contract. If two boys exchange marbles, their transaction is a contract, even if it is hard for outsiders to fathom why either preferred the one or the other. Consideration does not need to have a quantifiable financial value * * *. [Emphasis added.]
The Bank, however, argues that the proposed exchange was not a contract because it received no remuneration for performing the service of bill exchange. In other words, rather than view the transaction as an exchange of one thing for another, the Bank urges us to treat the transaction as a gratuitous service provided by the Bank, for no consideration. We cannot regard the Bank's provision of bill exchange services as "gratuitous" in any legal sense. Profit-making establishments often offer to engage in transactions with no immediate gain, or even at a loss, as a means of inducing customers to engage in other transactions that are more lucrative; such offers may nonetheless be contractual, and they do not lack consideration. If, as is alleged in the complaint, the Bank effectively extends bill exchange services to persons of one race and not the other, that is sufficient to come within the ambit [realm] of Section 1981.
• Decision and Remedy The court reversed the lower court's dismissal of the plaintiffs' complaint and remanded the case "for further proceedings in accordance with this opinion." There is consideration in an exchange of paper money as there can be in any other bargained-for exchange.
• The Ethical Dimension In most circumstances, parties are free to make whatever promises they wish, but only those promises made with consideration will be enforced as contracts. What is the purpose of this requirement
• The Legal Environment Dimension The courts generally do not weigh the sufficiency of consideration according to the comparative economic value of what is exchanged. Should they Why or why not