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Real Property for Indiana Paralegals
Section 9 . 1 . 2 . 1

Gifts

Jonathan Watson

With certain exceptions, offers to make gifts are not offers that can form the basis of a contract. A gift is something which requires no “thing” to be given in exchange – in other words, it is given and accepted, but the other party need not do anything significant in exchange. Therefore, if someone says to you, “I will give you a car” and the only thing you need do is take the keys, and you do, that is a gift. As noted in one Indiana case, a gift:

[A] voluntary transfer of property by one person to another without consideration. It is an act which has taken place and is complete in itself. For a gift to be incomplete is a negation of terms. There is either a gift or there is not a gift. There is no halfway point between the two. The issue here confronting us is whether or not there was a valid gift. Under our law, if there was incompleteness or something left to be done, there was no gift, but only an attempted gift.[1]

Therefore, an offer to make a gift, and an acceptance of that gift, is not a contract. If someone offers you that car, and you refuse, but later go and ask for it, and they refuse, you do not have an enforceable contract in court. One Indiana case put it this way: “An agreement, intention, or promise to make a gift effective in the future is void as being without consideration.” Id. at 419. Believe it or not, there is a test for whether something is a gift, which is:

(1) The donor must be competent to contract; (2) there must be freedom of will; (3) the gift must be completed with nothing left undone; (4) the property must be delivered by the donor and accepted by the donee; and (5) the gift must go into immediate and absolute effect.[2]

There IS one situation where a promise to make a gift may constitute a binding contract, and that is where the promise is a pledge to charity. While courts of different states are divided on this question, generally, courts will look for a way to enforce a charitable pledge against a donor.

[1] Norman v. Norman, 169 N.E.2d 414, 419 (Ind. App. 1st Div. 1960).

[2] Norman, supra.

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