Practice
Exam Question,
Question
1:
I
would advise Jill that she is not obligated to return the car to Uncle George
because delivering the title to the car to her constituted a completed gift.
Question
2:
I
would advise her that she may be able to recover the uninsured loss depending
on when Uncle George stopped paying the premiums. It’s not clear from the facts that Uncle
George ever paid the insurance premiums, either because he forgot or he broke
his promise.
Jill
may be able to recover on a promissory estoppel theory. Uncle George’s promise to pay her insurance
premiums induced her reasonable reliance on those premiums being paid. If she knew they weren’t being paid, she
might have chosen to keep the car in the Bates garage all the time or sell it
instead of risking theft or damage by driving it around. Uncle George should have reasonably expected
that his promise to pay for insurance would induce Jill to not pay for
insurance herself while continuing to drive the car. Jill actually did not buy insurance herself,
and kept driving the car, and it is likely that she would have acted
differently in the absence of Uncle George’s promise. Uncle George’s promise may be enforced even
though it was not bargained for, nor was it met with consideration.
However,
this remedy is limited. Jill will only
be given relief if it is necessary to prevent injustice. If Jill had reason to know that Uncle George
was going to get angry and stop paying for her insurance before she actually
received the letter, she should have changed her behavior in order to reduce
the risk of an uninsured loss.
On
the other hand, Uncle George’s promise in its entirety seems like a gift
promise. A majority of courts would enforce
a gift promise on the basis of promissory estoppel, but courts are generally
less likely to enforce such promises between family members.
Maybe
Jill was the cheapest cost avoider: if Uncle George simply forgot to pay the
premiums, Jill should have checked to make sure they were up to date. A court may find that justice does not
require that Jill be compensated because she should have checked that she was
insured rather than taking Uncle George’s word for it. On the other hand, Uncle George should have
told Jill before he stopped making the insurance payments so that she could
adjust her behavior accordingly.
Question
3:
Finally,
I would advise Jill that she will not be able to enforce Uncle George’s
promises to garage, maintain, fuel, and insure the car in the future because
there was no consideration for Uncle George’s promise. The $10 and the lock of hair were not
bargained for, that is why they are not real consideration. Uncle George clearly didn’t want the $10 or
the lock of hair, and thought they were a joke.
The value of the $10 is clearly out of proportion to the value of the
car as stated in the letter. Even though
adequacy of consideration doesn’t matter, the $10 being so far out of
proportion to the $100,000 value of the car is good evidence that the $10 was
not real consideration.
On
the other hand, the lock of hair does not have a particular monetary value that
any court could definitively attach. Furthermore,
Uncle George did finally accept both items knowing the possible legal
significance of doing so.