A contract is a contract – a cautionary tale about unfavourable deals

Consumer | Print Article

[Winter 2015]

There once lived a Frenchwoman named Jeanne Louise Calment. She was a widow – her husband having died during the war (not in battle, mind you, but after eating some bad cherries). Her daughter died from pneumonia and her only grandson was killed in a motor accident.

So in 1965, at the age of 90, Calment found herself living on her own and with no heir. She also had little in the way of private income, which was needed to fund the lifestyle to which she was accustomed. One thing she did have, however, was a Paris apartment.

To make the best of things, Calment struck a deal with a man named André-François Raffray. They agreed that he would get her apartment when she died and, in return, he would pay to her 2,500 francs per month until she died. Having consulted the actuarial tables, Raffray was sure he was onto a good thing. After all, how much longer could a nonagenarian be expected to live in 1965?

In fact, Raffray never did get his hands on the apartment. He died of cancer in 1995 aged 77. Calment, on the other hand, had just passed her 120th birthday and was still going strong. The following year, she even released a rap album called Time Mistress.

Even the grave could not save Raffray from this terrible bargain, as his estate was forced to keep making the monthly payments as long as Mrs Calment remained alive.

She finally passed away in 1997. She was 122 years and 164 days old. To this day, she holds the record for the longest human lifespan.

The transaction was a total disaster for Raffray. In 1965, he could confidently project a healthy profit. By the time of his death, however, he had already paid more than twice the value of the apartment to its long lived occupant.

And the worst part of it all? Raffray was a lawyer. He really should have known better.

But that’s the trouble with contracts. If everything goes as planned, a transaction might seem very favourable. It is only when your plans are derailed that you discover the true value of the arrangements you have negotiated.

If Raffray had consulted us, he probably would have been advised to cap his liability at some predetermined amount. Once the payments reached that level, his obligation to make them could have ended (or Calment could have been obliged to yield up the property).

But a deal is a deal. Once entered into, there’s not much that can be done about an unfavourable contract. Far better to talk to your lawyer first.