Lawyers Asleep at the Wheel? The Gm–Fisher Body Contract

Victor P. Goldberg, Columbia Law School


In the analysis of vertical integration by contract versus ownership, one event has dominated the discussion—General Motors’ (GM) merger with Fisher Body in 1926. The debates have all been premised on the assumption that the 10-year contract between the parties signed in 1919 was a legally enforceable agreement. However, it was not. Because Fisher's promise was illusory the contract lacked consideration. This note suggests that GM's counsel must have known this. It raises a significant question in transactional engineering: what is the function of an agreement that is not legally enforceable?