1/24/2006Class 71 Today, we will learn about promissory estoppel/reliance

1/24/2006Class 72 Class 7, Monday, January 24 Announcements Thursday Friday ; Problem 2-2 (158-59) Today’s agenda Q & A, Problem Set 2 and Outlining Handout Hypo from last class Kirksey v. Kirksey Greiner v. Greiner Katz v. Danny Dare Shoemaker v. Commonwealth Bank

1/24/2006Class 73 Q & A: Problem Set 2; Outlining Handout

1/24/2006Class 74 Hypo H owes debt to C that is presently due. W says to C, “If you promise to forbear from collecting on the debt, I will guarantee the obligation.” C says to W, “Okay. I will forbear from collecting until I want the money.” C forbears from collecting for two years, then tries to enforce W’s promise. Is W’s promise supported by consideration?

1/24/2006Class 75 Illusory Promises Restatement section?

1/24/2006Class 76 Example 1.Buyer promises to buy all the coal that it “would want to purchase,” in return for the seller’s promise to sell all that the buyer ordered.

1/24/2006Class 77 Examples (cont.) Termination clauses 2. A license agreement for the manufacture of Orange Crush gave the licensee the exclusive right and the duty to manufacture the soft drink in a specified territory, but it provided that the licensee could at any time terminate the contract.

1/24/2006Class 78 Trend? Either through interpretation or based on an implied duty of good faith, courts sometimes find “substance” to otherwise illusory promises, making them enforceable. More on this later in the semester when we deal with the implied obligation of good faith and fair dealing.

1/24/2006Class 79 Review Hypo A politician at a campaign rally tells the audience: “Vote for me, and I will eliminate government corruption.” You are in the audience. Later, you vote for this politician who wins the election. If the politician does not eliminate government corruption, do you have a contract claim against the politician?

1/24/2006Class 710 Kirksey v. Kirksey Alabama Supreme Court 8 Ala. 131 (1845)

1/24/2006Class 711 Who is suing whom? For what kind of damages? What is the legal basis for the claim? What is the factual basis for the claim? Arguments/defenses?

1/24/2006Class 712 What happened at trial? What happened on appeal? Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore?

1/24/2006Class 713 Did the court get it right?

1/24/2006Class 714 Evolution of a doctrine Kirksey—no relief; reliance upon a promise found not to constitute consideration. Tough result, but probably correct given the state of contract doctrine.

1/24/2006Class 715 Evolution (cont.) Ricketts v. Scothorn, 77 N.W. 365 (Neb. 1898)— promissory note: "May the first, I promise to pay to Katie Scothorn on demand, $2,000, to be at 6 per cent. per annum. J. C. Ricketts." He says to Miss Scothorn, 'I have fixed out something that you have not got to work any more.' He says, ‘none of my grandchildren work, and you don't have to.’ She quits her job. Court finds no consideration, but provides relief based on equitable estoppel.

1/24/2006Class 716 Equitable estoppel 1.What is an estoppel, generally? 2.What is an equitable estoppel, sometimes called an estoppel in pais? E.g., We enter into K for sale of land. When you ask that we put it in writing, I tell you that the statute of frauds does not apply to transactions such as this. You rely on this statement. Because of your reliance on my statement, if I later refuse to honor the K and you sue for enforcement, I will be estopped from asserting the statute of frauds against you.

1/24/2006Class 717 Is Ricketts a good application of equitable estoppel? What is the granddaughter relying on?

1/24/2006Class 718 Greiner v. Greiner Kansas Supreme Court 131 Kan. 760, 293 P. 759 (1930)

1/24/2006Class 719 Who is suing whom? For what kind of damages? What is the legal basis for the claim? What is the factual basis for the claim? Arguments/defenses?

1/24/2006Class 720 What happened at trial? What happened on appeal? Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore?

1/24/2006Class 721 First Restatement § 90. Promise reasonably inducing definite and substantial action is binding. A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.

1/24/2006Class 722 Examination of Louis Greiner A.I heard about him moving back, and she gave him that place as his share... Q.That eighty acres? A.Yes, sir.... Q.And did she say why she was going to give him that eighty? A.Yes, sir....

1/24/2006Class 723 amazing cross examination

1/24/2006Class 724 Penultimate sentence “... this court cannot say it would not be unjust to deny him a deed...”

1/24/2006Class 725 Penultimate sentence “... this court cannot say it would not be unjust to deny him a deed...” QUADRUPLE NEGATIVE!

1/24/2006Class 726 Note 2. Detrimental reliance?

1/24/2006Class 727 What is the difference between equitable estoppel and promissory estoppel?

1/24/2006Class 728 Compare consideration with promissory estoppel

1/24/2006Class 729 First v. Second Restatement § 90

1/24/2006Class 730 First Restatement § 90. Promise reasonably inducing definite and substantial action is binding. A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.

1/24/2006Class 731 Second Restatement § 90. Promise Reasonably Inducing Action Or Forbearance (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.

1/24/2006Class 732 first Restatement *induce action or forbearance of a definite and substantial character second Restatement *induce action or forbearance [or a third person] **remedy may be limited as justice requires

1/24/2006Class 733 Elements?

1/24/2006Class 734 Elements? 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.

1/24/2006Class 735 Elements? 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.

1/24/2006Class 736 Elements 1.promise 2.which promisor can reasonably expect to induce action or forbearance 3.which does induce such action or forbearance 4.is binding if injustice can be avoided only by enforcement of the promise

1/24/2006Class 737 Elements, reworked 1.Promise 2.which induces action or forbearance on the part of the promisee 3.which was reasonably foreseeable by promisor 4.is binding if injustice can be avoided only by enforcement of the promise

1/24/2006Class 738 Katz v. Danny Dare Missouri Court of Appeals 610 S.W.2d 121 (1980)

1/24/2006Class 739 Who is suing whom? For what kind of damages? What is the legal basis for the claim? What is the factual basis for the claim? Arguments/defenses?

1/24/2006Class 740 What happened at trial? What happened on appeal? Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore?

1/24/2006Class 741 Use of analogous cases: A lesson in comparing and contrasting Feinberg v. Pfeiffer Trexler’s Estate Pitt v. McGraw-Edison

1/24/2006Class 742 Plowman revisited; more on comparing and constrasting In light of Katz, was Plowman decided incorrectly? Is Plowman more like Katz, Hayes v. Plantations Steel Co. (note 3), or Pitt?

1/24/2006Class 743 Note 2. Detrimental reliance?

1/24/2006Class 744 ERISA Employment Retirement Income Security Act of 1974

1/24/2006Class 745 Shoemaker v. Commonwealth Bank Pennsylvania Superior Court 700 A.2d 1003 (1997)

1/24/2006Class 746 Who is suing whom? For what kind of damages? What is the legal basis for the claim? What is the factual basis for the claim? Arguments/defenses?

1/24/2006Class 747 What happened at trial? What happened on appeal? Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore?

1/24/2006Class 748 Note 1 a.“I told them go ahead and do so because at that point I was in no financial situation to do so on my own.” b.Duration. c.October 25 letter. d.“No-oral modification” clause

1/24/2006Class 749 Note 4 A good exercise: construct hypos based on the brief parentheticals for the successful and unsuccessful causes of action based on promissory estoppel.

1/24/2006Class 750 Note 5 For our purposes, do not concern yourself with subsection 2 of §90 dealing with charitable subscriptions and marriage settlements.

1/24/2006Class 751 Brief recap Historically: 4 categories where promissory estoppel generally arose 1.Gratuitous promise to convey land, followed by reliance by the promisee who moves onto the land and makes improvements, often in the form of an immovable structure. 2. Gratuitous promises made by bailees in connection with gratuitous bailments. The bailor delivers goods to the bailee. Bailee promises to get insurance but fails to do so. Bailor in reliance does not get insurance. Goods are destroyed. 3. Gratuitous promises to charities. 4. Gratuitous promises within the family.

1/24/2006Class 752 Another important category: gratuitous promises to pay a pension

1/24/2006Class 753 § 90 1.promise 2.induced action/forbearance by promisee 3.action/forbearance was foreseeable by promisor 4.injustice Counterarguments: 1.no promise 2.no action/forbearance; not induced—would have happened anyway 3.not reasonably foreseeable 4.no injustice if promise not enforced

1/24/2006Class 754 More on action/forbearance Induced? Was the person's freedom to act or not act affected/influenced/induced by the promise? Was action/forbearance detrimental to promisee? Consider Vastoler v. American Can Co.

1/24/2006Class 755 Approach First see if a breach of contract claim can be brought based on mutual assent and consideration. If that fails, see if you can bring an alternative basis for recovery such as promissory estoppel/reliance OR restitution, which we will cover on Thursday.

1/24/2006Class 756 End of Class Assignments Thursday Friday ; Problem 2-2 (158-59)