2. Conditional Gifts

Speaking more generally, it is possible to give other kinds of conditional gifts. A conditional gift is a gift that will return to the donor if a condition subsequent is not fulfilled. (By contrast, a promise to give a gift if a condition precedent is fulfilled is an unenforceable promise to make a gift.) For example, a student’s parents might give him a car, conditioned on his graduating law school in three years. If the student fails to graduate in that time, the car must be returned. During that period, however, the gift is otherwise irrevocable: the parents cannot change their minds in year two and demand the car back, as long as the student remains willing to fulfill the condition and remains on track to do so.

Since many gifts are given orally, how can we know which are conditional, and what those conditions are? Would you support a rule that conditions can only be imposed on gifts if the conditions are written down? See State ex rel. Pai v. Thom, 563 P.2d 982 (Haw. 1977) (delivery of a deed with an oral condition was irrevocable even if condition was unsatisfied); but see Martinez v. Martinez, 678 P.2d 1163 (N.M. 1984) (allowing grantor of deed to offer parol evidence of oral condition). Pai states the traditional common law rule for transfers of land – why do you think this is so? What might justify relaxing the traditional rule?

Can conditions sometimes be implied on gifts of personal property? Consider the following case, involving an engagement ring.