Today, we will learn about promissory estoppel/reliance

1. Today, we will learn about promissory estoppel/reliance Class 7

2. Class 7, Monday, January 24 Announcements Thursday 116-34 Friday 146-58; 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 Class 7

3. Q & A: Problem Set 2; Outlining Handout Class 7

4. 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? Class 7

5. Illusory Promises Restatement section? Class 7

6. 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. Class 7

7. 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. Class 7

8. 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. Class 7

9. 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? Class 7

10. Kirksey v. Kirksey Alabama Supreme Court 8 Ala. 131 (1845) Class 7

11. 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? Class 7

12. What happened at trial? What happened on appeal? Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore? Class 7

13. Did the court get it right? Class 7

14. 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. Class 7

15. Evolution (cont.) Ricketts v. Scothorn, 77 N.W. 365 (Neb. 1898)—promissory note: "May the first, 1891. 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. Class 7

16. Equitable estoppel • What is an estoppel, generally? • 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. Class 7

17. Is Ricketts a good application of equitable estoppel? What is the granddaughter relying on? Class 7

18. Greiner v. Greiner Kansas Supreme Court 131 Kan. 760, 293 P. 759 (1930) Class 7

19. 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? Class 7

20. What happened at trial? What happened on appeal? Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore? Class 7

21. 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. Class 7

22. Examination of Louis Greiner • I heard about him moving back, and she gave him that place as his share . . . • That eighty acres? • Yes, sir. . . . • And did she say why she was going to give him that eighty? • Yes, sir. . . . Class 7

23. amazing cross examination Class 7

24. Penultimate sentence “ . . . this court cannot say it would not be unjust to deny him a deed . . .” Class 7

25. Penultimate sentence “ . . . this court cannot say it would not be unjust to deny him a deed . . .” QUADRUPLE NEGATIVE! Class 7

26. Note 2. Detrimental reliance? Class 7

27. What is the difference between equitable estoppel and promissory estoppel? Class 7

28. Compare consideration with promissory estoppel Class 7

29. First v. Second Restatement § 90 Class 7

30. 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. Class 7

31. 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. Class 7

32. 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 Class 7

33. Elements? Class 7

34. 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. Class 7

35. Elements? A promisewhich the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third personand which does induce such action or forbearanceis binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. Class 7

36. Elements • promise • which promisor can reasonably expect to induce action or forbearance • which does induce such action or forbearance • is binding if injustice can be avoided only by enforcement of the promise Class 7

37. Elements, reworked • Promise • which induces action or forbearance on the part of the promisee • which was reasonably foreseeable by promisor • is binding if injustice can be avoided only by enforcement of the promise Class 7

38. Katz v. Danny Dare Missouri Court of Appeals 610 S.W.2d 121 (1980) Class 7

39. 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? Class 7

40. What happened at trial? What happened on appeal? Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore? Class 7

41. Use of analogous cases: A lesson in comparing and contrasting Feinberg v. Pfeiffer Trexler’s Estate Pitt v. McGraw-Edison Class 7

42. 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? Class 7

43. Note 2. Detrimental reliance? Class 7

44. ERISA Employment Retirement Income Security Act of 1974 Class 7

45. Shoemaker v. Commonwealth Bank Pennsylvania Superior Court 700 A.2d 1003 (1997) Class 7

46. 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? Class 7

47. What happened at trial? What happened on appeal? Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore? Class 7

48. Note 1 • “I told them go ahead and do so because at that point I was in no financial situation to do so on my own.” • Duration. • October 25 letter. • “No-oral modification” clause Class 7

49. Note 4 A good exercise: construct hypos based on the brief parentheticals for the successful and unsuccessful causes of action based on promissory estoppel. Class 7

50. Note 5 For our purposes, do not concern yourself with subsection 2 of §90 dealing with charitable subscriptions and marriage settlements. Class 7