Contracts Class Notes 10/22/03

 

Looks like we’re getting practice exams back today.

 

Skip pp. 271-278.

 

Last week, we ended up at promises grounded in the past.

 

Kirksey v. Kirksey

 

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.

 

Clovis hasn’t called on anyone in a long time.  He’s not much of a caller-oner.

 

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.

 

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