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1 George Mason School of Law Contracts I Promissory Estoppel F.H. Buckley

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1 1 George Mason School of Law Contracts I Promissory Estoppel F.H. Buckley

2 2 Estoppel  Estoppel by representation of fact  Promissory estoppel

3 3 Estoppel: An Ideological Battle? Oliver Wendell Holmes Samuel WillistonArthur Corbin

4 4 Promisory Estoppel and Reliance A sword, not a Shield

5 Ricketts v. Scothorn  I assume you were as distressed as I was at this example of male chauvinism… 5

6 Ricketts v. Scothorn  Was there consideration given by Katie for the promise? What was the reliance? 6

7 7 George Mason School of Law Contracts I Promissory Estoppel F.H. Buckley

8 Exam  Writing by laptop  Four questions, Two hours… 8

9 What kind of reliance is needed?  Suppose I promise you $1,000,000 and, believing me, you purchase a new car. I renege. Have you relied? And would this ground a remedy? 9

10 What kind of reliance is needed?  Suppose I promise you $1,000,000 and, believing me, you feel overjoyed. Have you relied? 10

11 Psychic Reliance What happens when the cheque bounces tomorrow… 11 Happy, Happy, Joy, Joy

12 What kind of reliance is needed?  Suppose I promise you $1,000,000, and have no intention of performing, but think it would be amusing to fool you. 12

13 Haase v. Cardoza  Was the promise supported by consideration? 13

14 Haase v. Cardoza  Was the promise supported by consideration?  What about reliance? 14

15 Haase v. Cardoza  What about reliance?  The former restatement provided for no relief unless the reliance was “definite and substantial.” What is the effect of the change? 15

16 Haase v. Cardoza  What about reliance?  Present Restatement § 90 conditions relief: “injustice can be avoided only by enforcement.” What does that mean? 16

17 Wright v. Newman (p. 160)  How would you decide this?  What was the reliance? 17

18 Why might a promisor want to incur legal liability? 18

19 Why might a promisor want to incur legal liability?  And why might he not? In a case such as Haase… 19

20 Why might a promisor want to incur legal liability?  And why might he not? Cf. Ricketts 20

21 Why might a promisor want to incur legal liability?  And why might he not? Cf. Ricketts How would you expect promisors to react, in an interfamily setting, if all promises were enforceable. 21

22 Why might a promisor want to incur legal liability?  And why might he not? How would you expect promisors to react, in an interfamily setting, if all promises were enforceable.  Fewer promises  Conditional promises 22

23 Why might a promisor want to incur legal liability?  And why might he not? Might promisees sometimes be better off if family promises are not enforceable? 23

24 The Employment Context  Feinberg v. Pfeiffer What was the promise and why was it made? 24

25 The Employment Context  Feinberg v. Pfeiffer What was the promise and why was it made? What was the reliance? 25

26 The Employment Context  Feinberg v. Pfeiffer What was the promise and why was it made? What was the reliance?  What it relevant that she discovered she had cancer? 26

27 Why a different result in Hayes? 27

28 Why a different result in Hayes?  Feinberg retired after the promise; Hayes decided to retire before the promise, and retired a week after it was made  No formal provision, no board resolution 28

29 Why a different result in Hayes?  Did Hayes have a bad lawyer? 29

30 Why a different result in Hayes?  Did the promisors intend to assume legal liability in this case? In Feinberg? 30

31 Chartiable Subscriptions  Salsbury v. Northwestern Bell Charles City College operated from 1967 to It welcomed unconventional students who had not seen success at other colleges. It [was] also attended by a substantial number of young men seeking draft deferments that would allow them to avoid military service during the Vietnam War. (Wikipedia) 31

32 Chartiable Subscriptions  You and I meet and agree that we will both donate $5,000 to a college Consideration? 32

33 Chartiable Subscriptions  I pledge $1,000,000 to a college which promises to name a building after me Consideration? Allegheny College 33 Allegheny College

34 Chartiable Subscriptions  Salsbury v. Northwestern Bell Did Salsbury rely on the subscription? Restatement § 90(2) 34

35 Chartiable Subscriptions  Salsbury v. Northwestern Bell Are you satisfied with the rationale? 35

36 Charitable Subscriptions  Can you reconcile Salsbury with DeLeo? 36

37 Charitable Subscriptions  Can you reconcile Salsbury with DeLeo? Illness Fiduciary relationship Oral promise Storage room? 37

38 Charitable Subscriptions  Should such promises automatically be binding? Is that what 90(2) requires?  Comment f 38

39 Charitable Subscriptions  Why so few such cases? 39

40 The Material Benefits Rule  Webb v. McGowin p W.T. Smith Lumber Co., Chapman AL

41 The Material Benefits Rule  Webb v. McGowin 41 J. Greeley McGowin

42 The Material Benefits Rule  Webb v. McGowin Recall Bailey v. West  Is Webb a suitable case for relief in quasi- contract? 42

43 The Material Benefits Rule  Webb v. McGowin Recall Bailey v. West  Is Webb a suitable case for relief in quasi- contract?  What did the promise add? 43

44 The Material Benefits Rule  Webb v. McGowin Treat this as a contracts case. Is there a consideration problem? 44

45 The Material Benefits Rule  Webb v. McGowin Treat this as a contracts case. Is there a consideration problem?  The past consideration rule 45

46 The Material Benefits Rule  Webb v. McGowin Treat this as a contracts case. Is there a consideration problem?  The past consideration rule  The material benefits rule: Restatement § 86 46

47 The Material Benefits Rule  Webb v. McGowin Can you distinguish it from Mills v. Wyman: p.192? 47

48 The Material Benefits Rule  Webb v. McGowin Can you distinguish it from Mills v. Wyman? What about Boothe v. Fitzpatrick (p. 198) 48

49 The Material Benefits Rule  Previously binding promises Restatement § 82  Statute of Limitations Restatement § 83  Debt discharged in bankruptcy Restatement § 85  Voidable duties 49

50 The Material Benefits Rule  Pitching ideas: Desny v. Wilder p

51 The Material Benefits Rule  Pitching ideas: Desny v. Wilder Was this a valid contract?  What would the implied terms be?  What if the secretary had not promised? 51

52 Irrevocable Offers  The consideration requirement amounts to a presumption against irrevocable offers Why does this make sense? 52

53 Irrevocable Offers  The consideration requirement amounts to a presumption against irrevocable offers When doesn’t it make sense? 53

54 Irrevocable Offers  The consideration requirement amounts to a presumption against irrevocable offers What purposes are served by option contacts?: Restatement §§ 25, 37, 87(1) 54

55 Irrevocable Offers  The consideration requirement amounts to a presumption against irrevocable offers What purposes are served by option contacts?  Hedging strategies 55

56 Irrevocable Offers  The consideration requirement amounts to a presumption against irrevocable offers What purposes are served by option contacts?  Compensation schemes 56

57 Irrevocable Offers  The consideration requirement amounts to a presumption against irrevocable offers What purposes are served by option contacts?  Land assembly and hold-outs 57

58 Irrevocable Offers  The consideration requirement amounts to a presumption against irrevocable offers What purposes are served by option contacts?  Pre-contractual reliance expenditures 58

59 Irrevocable Offers  The Brooklyn Bridge example: p

60 Irrevocable Offers  Legal restrictions on the right to revoke an offer? Revocation not effective unless communicated: Restatement § 40 60

61 Irrevocable Offers  Legal restrictions on the right to revoke an offer? Revocation not effective unless communicated: Restatement § 40 Full performance of unilateral contract: St. Peter 61

62 Irrevocable Offers  Legal restrictions on the right to revoke an offer? Revocation not effective unless communicated: Restatement § 40 Full performance of unilateral contract: St. Peter Acceptance through part performance: Restatement § 34(2) 62

63 Irrevocable Offers  Legal restrictions on the right to revoke an offer? Revocation not effective unless communicated: Restatement § 40 Full performance of unilateral contract: St. Peter Acceptance through part performance: Restatement § 34(2) Acceptance through reliance: Restatement § 34(3) 63

64 Irrevocable Offers  Legal restrictions on the right to revoke an offer? Revocation not effective unless communicated: Restatement § 40 Full performance of unilateral contract: St. Peter Acceptance through part performance: Restatement § 34(2) Acceptance through reliance: Restatement § 34(3) Promissory Estoppel: Restatement § 90 64

65 Irrevocable Offers  Legal restrictions on the right to revoke an offer? Revocation not effective unless communicated: Restatement § 40 Full performance of unilateral contract: St. Peter Acceptance through part performance: Restatement § 34(2) Acceptance through reliance: Restatement § 34(3) Promissory Estoppel: Restatement § 90 Collateral option contract: Restatement § 45 65

66 Irrevocable Offers  Legal restrictions on the right to revoke an offer? Are all of these consistent with the idea that the offeror’s intention to create legal relations is determinative? 66

67 Irrevocable Offers  Legal restrictions on the right to revoke an offer? Firm offers under UCC §  Is this related in any way to offeree reliance? 67

68 Construction Contracts Client General Contractor Sub-contractor 68

69 Pavel v. Johnson p. 234 NIH PEI (Pavel/HVAC) Johnson (Kick) 69

70 Pavel v. Johnson  Aug. 5: subcontractor bids  Aug. 26: PEI asks Johnson for fresh bid breaking out Powers project  Aug. 30: PEI “accepts” Johnson’s bid  Sept. 1: Johnson notes an error and seeks to withdraw bid  Sept. 2: PEI affirms contract  Sept. 28: NIH awards contract to PEI 70

71 Pavel v. Johnson  Did Johnson have the right to revoke its offer? Contingent option contract under which the subcontractors could not withdraw if PEI was awarded the contract by NIH, but could withdraw prior thereto 71

72 Pavel v. Johnson  Did Johnson revoke its offer?  Had it the right to do so? Contingent option contract under which the subcontractors could not withdraw if PEI was awarded the contract by NIH, but could withdraw prior thereto Was this unfair to PEI? 72

73 Pavel v. Johnson  Did Johnson revoke its offer?  Had it the right to do so? Was there sufficient detrimental reliance to raise a promissory estoppel? 73

74 Pavel v. Johnson  Did Johnson revoke its offer?  Had it the right to do so? Was there sufficient detrimental reliance to raise a promissory estoppel?  What was the relevance of the Aug. 26 fax on the POWERS breakout. 74

75 Pavel v. Johnson  Did Johnson revoke its offer?  Had it the right to do so? Was there sufficient detrimental reliance to raise a promissory estoppel?  Baird v. Gimbel: subcontractor withdraws two days before contractor awarded the contract 75

76 Pavel v. Johnson  Did Johnson revoke its offer?  Had it the right to do so? Was there sufficient detrimental reliance to raise a promissory estoppel?  Where subcontractor withdraws a month before contractor is awarded the contract, what is the latter to do? 76

77 Pavel v. Johnson  Did Johnson revoke its offer?  Had it the right to do so? Was there sufficient detrimental reliance to raise a promissory estoppel?  If the subcontractor is locked in, can the contractor shop around? 77

78 Pavel v. Johnson  Did Johnson revoke its offer?  Had it the right to do so? You are the subcontractor. How do you protect yourself in such cases? 78

79 Good luck! 79


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