Contracts
Class Notes
Looks
like we’re getting practice exams back today.
Skip
pp. 271-278.
Last
week, we ended up at promises grounded
in the past.
The
plaintiff is the wife of the defendant’s brother, that is to say, the plaintiff
is the sister-in-law of the defendant.
The defendant wrote the plaintiff a note making a promise that if the plaintiff
would come down and see him he would let her stay on his land.
The
plaintiff had resided on public land, and on the basis of the promise, she
decided to pull up her stakes and move to the defendant’s place. It was only a 60-70 mile move, but in 1845,
it was a big deal. The defendant gives
her a comfortable house for two years, but then he kicks her out for some
unknown reason.
The
plaintiff sues on his promise and recovers at trial. That’s reversed on appeal to the Supreme
Court of Alabama. It’s a very short
opinion, and it’s weird because it’s actually a dissent. The dissenter writes and says that the
majority voted to send the plaintiff away with nothing.
There’s
a promise. It’s written down in the
letter. Also, after two years of performance,
he threw her out, which appears to be a breach.
However, there is no remedy against the defendant, which must imply that
the court finds that the promise was not enforceable. It was found to be purely gratuitous and
without consideration. Therefore, the
brother-in-law is free to change his mind.
Do
we agree that there was no consideration for this promise?
When
people promise to make gifts, they frequently define just what they’re
promising to give. The defendant in this
case basically said that he would give the plaintiff “the place”, but the defendant
doesn’t say much else.
Why
do people promise to make gifts? It’s
usually because they like the promisee and they want that person to “do
well”, as the brother-in-law says in Kirksey. There is no consideration for such promises.
Consider
the “tramp case”. This hypothetical
distinguishes a “condition of a gratuitous promise” from the “price of a
promise”. A gift promise doesn’t turn
into a contract just because you aren’t promising to do every little thing
involved in the giving of the gift.
Kirksey would have come out differently if the plaintiff
had been booted out of the house immediately upon arriving. Then she would have incurred a detriment, but
no benefit at all. The facts as
they are show that she got at least two years’ worth of good livin’. That’s something, and that might be all that
was really promised. The letter itself
was pretty vague.
It
is easier to enforce a definite, clear promise like the one in Ricketts
than the vague one in Kirksey.
Another
factor that goes against enforcement of this promise is the fact that there was
no trade involved. The defendant
probably wasn’t trading the plaintiff’s move for giving her a home.
Restatement
§ 90
If
§ 90 were in operation at the time of Kirksey,
what would the result have been?
Notice
that this section is located in a part of the Restatement called “promises
without consideration”. § 90 can lead to
a partial enforcement. On the
other hand, a promise with consideration leads to full enforcement. If you represent a plaintiff trying to
recover on a breach of contract, you want to keep your distance from § 90.
(1) A promise which the promisor should reasonably
expect to induce action or forbearance on the part of the promisee or a third
person and which does induce such action or forbearance is binding if injustice
can be avoided only by enforcement of the promise. The remedy granted for
breach may be limited as justice requires.
(2) A charitable subscription or a marriage
settlement is binding under Subsection (1) without proof that the promise
induced action or forbearance.
REST 2d CONTR § 90
In
order for § 90 to apply, the following must be true:
1. There must be
a promise.
2. The promisor
must foresee reliance by the promisee.
3. The promisee
must actually rely on that promise.
4. We’ll only
make the promise binding when justice requires it.
5. We may limit
the remedy as justice requires.
How
much enforcement does justice require in Kirksey? Didn’t the plaintiff already get two years of
living in a nice house? We might decide
that this is pretty just, especially in light of how vague the original promise
was. We’re not going to get terribly
outraged about the defendant changing his mind.
This
is a “soft-edged” rule in some sense.
It
looks like § 90 would not have changed the result here.
One
big question is: Was the reliance foreseeable? If not, we won’t enforce the promise. Assuming the reliance was foreseeable and
reasonable, does justice require that we enforce the promise?
The
facts in Kirksey described a
conditional gift. “I’ll give you a
present if you’ll come and get it.”
It
doesn’t take much to add consideration to the picture. Say you add this sentence to the
brother-in-law’s letter: “I am very lonely.”
Now you have a bargain. The
brother-in-law is seeking something in exchange for his promise. In exchange for the promise of a gift, he’ll
have company and he’ll be less lonely.
This would push strongly towards enforcement of this promise.
Ricketts
v. Scothorn
Katie
Scothorn is working as a bookkeeper and her grandfather comes in and gives her
a $2,000 promissory note. She takes the
note and quits her job. Did Katie give
something in exchange for her grandfather’s promise? Maybe quitting work was the consideration for
the promise. The grandfather suggested
that he didn’t want her to work. But
there’s a problem: the grandfather gave her the note, and thus made the
promise, before he started talking to her about quitting work. This could be an argument for no consideration,
no exchange, no enforcement.
Say
there’s no bargain. How might we still enforce
this promise?
§ 90 = promissory estoppel =
unbargained-for reliance
Note
that we saw garden-variety equitable estoppel in Acme Mills. This is some factual statement that is relied
upon to the promisee’s detriment. The
remedy to this is to hold the promisor to his lie. If the other party relied on your lie, then
in some sense your lie becomes the legal truth.
On
the other hand, here the promisor has made a promise. Let’s say the promise is unsupported by consideration. Absent reliance, you could repudiate without
any cost. But if the other party relied
on your promise, we will “estop” the promisor from denying that the promise was
made.
In Ricketts,
the defendant intentionally influenced the plaintiff to make her quit her
job. The court argues that it would be unfair
to let the defendant repudiate the promise.
This is an example of promissory estoppel.
But
was Scothorn’s position really altered for the worse? Was it worse to not be working than to be
working? Also, she didn’t have any
problem when she got back into the workforce.
She went without wages for a certain period of time, but in the meantime
she had a nice vacation.
Will
we enforce the whole $2,000 promise?
Or will we only enforce that portion that sets off her lost wages on her
“vacation”?
If
there were consideration, adequacy is immaterial, and BOOM! We enforce the whole thing. Furthermore, in the modern world not as much
is required for us to say there’s consideration for the promise.
Both
of the cases above are part of a “family” where the promises involved would not
have been made if it weren’t “all in the family”. On the other hand, when we look at insurance
cases like Prescott v. Jones and Siegel v. Spear & Co., we’re
in a business context.
Here
come the exams! I think my exam number
was something like 827.
The
mean score was 13.6. The median was 14. The highest score was a 27. The lowest score was a 1. There was no maximum or minimum score. Think about the exams.