Promises within the family
Kirksey v. Kirksey
8 Ala. 131 (1845).
Question
Was this promise between family members enforceable?
Rule
For a contract to be enforceable, there needs to be consideration.
Holding
Here, there was not consideration, judgement reversed.
Facts
Sister-in-law was a recent widow and the brother to the deceased wrote a letter inviting her to come and stay and he would give her lodging until she was settled. She did so for two years before he had her move to a less comfortable house in the woods and then had her move away altogether.
She sued and obtained 200 dollars during trial.
Analysis
The opinion writer believes that there was sufficient consideration. However, the majority said that there was insufficient consideration because the promise from the defendant was a gratuity (gift) and cannot be found to be consideration.
Takeaway
This is an old common law approach and we must ask if a current court would find that there was consideration from the brother.
Additional Notes
The key word from the letter is the word “preference” which is not a word meaning “I would rather”. Instead, this means that you have the ability to purchase something.
Here, here had her move to his land so he could get a discount on the land. However, the law changed and so she could get the land instead of him. That’s why he kicked her off the land and the 200 dollar jury verdict was the difference of the discount she would have received.
Harvey v. Dow
962 A.2d 322 (Maine 2008).
Harvey is the plaintiff, she lost in trial court and appealed.
Question
When can a general promise without terms or consideration be enforced?
Rule
A promissory estoppel can be enforced if there are generalized words affirmed by the intent and action of the promisor.
Holding
There was a general promise confirmed by the actions of the Dows, judgement reversed and remanded for further trial.
Facts
Teresa Harvey, plaintiff, is the daughter of the Dows, defendant. The Dows owned a substantial amount of property and as the children were growing up, would make several statements that the property was reserved for their children (however, it wasn’t clear which land or when that would occur). Eventually, Teresa grew up, and obtained permission from her family to move their mobile home onto the property. Eventually, she obtained permission and her father worked extensively with her to get a permit and start construction on a permanent home on the property (there was no transfer of deed). However, after some time, there were some disagreements between the parties (loan and repayment, and don’t like her new partner) and Harvey sued for breach of contract.
The trial court said that the generalized promises of the Dows did not constitute sufficient terms to be seen as a contract and dismissed her case.
Analysis
Here, however, the court says that Mr. Dow not only make generalized promises but implied that those promises were valid through his actions. This was something the trial court failed to take into consideration. A promise can be made without explicit terms if the actions of the parties confirm the intent to have made a promise.
Here, Mr. Dow worked extensively to get the construction permit for the property and he performed much of the construction himself. These actions can be seen as a confirmation that he intended to live up to the generalized promises he had previously made.
Takeaway
A promissory estoppel can be made without specific terms as long as the action from the parties show an intent that a contractual promise had been made.
Additional Notes
The trial court said that the statements were not enforceable primacies even if they were subject to “detrimental reliance.” Additionally, the court saids that the plaintiff did not establish that there was an offer to stay on the property.
Here, there are times when there not a contract but we treat it as one.
Even though the there was no consideration, there was reliance from the plaintiff that the actions were sufficient for a promise.
“Detrimental reliance” means injustice
Restatement (2d) Contracts §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
A promise alone is not enough to establish a contract. The promissory estoppel requires the promise + actions taken by the promising party.
As a lawyer, we should not prospectively (in advance) rely on section 90. This section is only here for remedial purposes.
Charitable Donations
King v. Trustees of Boston University
420 Mass. 52 (1995).
Coretta Scott King (Widow of Dr. Martin Luther King Jr.) is plaintiff. Lost and appealed.
Question
Whether there was a promise to transfer ownership of the bailed property and whether there was consideration or reliance on that promise.
Rule
A charitable subscription is a promise to give real or personal property for charitable purposes.
Holding
There was a promise of transfer to ownership. Additionally, there is a question about consideration. Therefore, it was right to go to the jury. Judgment affirmed.
Facts
Before his death, Dr. Martin Luther King Jr. received a request from BU to incorporate some of his correspondence in their newly founded library. MLK responded saying that his correspondence was to be transferred to BU but would remain in his legal possession until he saw fit to release them. However, if he died, all those effects would be under the legal possession of BU.
After his death, his wife sued BU to retain the letters that had been given as a charitable subscription to BU. The trial court disagreed. They said that it was up to a jury to decide if there was a promise to transfer ownership and if there was a reliance from BU on that promise.
Analysis
There were two statements in the letter by Dr. King that the court relies on here. “I intend each year to indicate a portion of the materials deposited with Boston University to become the absolute property of Boston University as an outright gift from me, until all shall have been thus given to the University. In the event of my death, all such materials deposited with the University shall become from that date the absolute property of Boston University.”
This language was sufficient to be considered charitable subscription. There was a promise of transferred ownership and consideration is questionable. However, BU used this information as a reliance that they could handle, manage, and study the documents as long as they executed a high standard of care for those documents.
Takeaway
Charitable subscriptions can be enforced even if they may be lacking some traits of a contract.
Additional Notes
This jury verdict was that this was a charitable pledge, not a contract. Things that are charitable subscriptions needs to have either a consideration, or there is a reliance. Here, the jury said that there was both consideration and reliance.
Prong 1: Promise. Here, yes.
Prong 2: Evidence of reliance. Here, yes. Here, they indexed the papers, provided them to researchers, and hired staff. In other words, they relied on that promise enough to be a promissory estoppel.
Restatement (2d) Contracts §90(2) charitable subscriptions
A promise is made if the donor has partially performed or at the time of the pledge, the donor serves on a governing board.
Promises in a Commercial Context
This section discusses how courts have used §90 to uphold commercial promises even when there is a lack of consideration.
Katz v. Danny Dar, Inc.
610 S.W.2d 121 (Mis. App. 1980).
Katz is the plaintiff. He lost in trial court and appealed.
Question
Is Katz able to invoke a doctrine of promissory estoppel to obtain his full pension?
Rules
Elements of Promissory Estoppel are:
- A promise
- A detrimental reliance on such promise
- Enforcement of the promise avoids injustice
The court focuses primarily on the second element. The test for that is
“Not whether Katz gave up something to which he was legally entitled, but rather whether Dare made a promise to him on which he acted to his detriment.”
Holding
Yes, he had acted to his detriment in reliance of the promise. Judgment reversed.
Facts
Katz was the brother-in-law of the Dare’s owner. He had worked for Dare for 25 years. At one point, he had sustained an injury in an attempt to prevent a robbery of the company (at age 65 at the time). Consequently his performance declined and Dare wanted to remove him from employment because he was a liability rather than a help (making mistakes). So, Dare offered this pension plan to induce Katz to retire. Katz did not want to take it, but further persuasion convinced him to take the deal. Had he not retired, he would have been fired. However, the key point is that he was not fired and had not announced his retirement before accepting the promise.
Eventually, Katz began part-time work again for Dare. When he refused to work more often (at age 70), Dare cut his pension in half so Katz sent it back for the full amount. Dare refused to pay entirely, for which Katz sued.
Analysis
The issue at hand is if there was a detrimental reliance on a promise. There is no doubt that there was a promise. The trial court said that there was no detrimental reliance because he would have been fired had he not taken the promise. In other words, he was not given an alternative and could have had no detriment. If that was the case, his action would have failed.
The appellate court disagrees. They say that although he was going to be fired if he had not taken the deal, he had not yet been fired. This is super similar to another case where, during the Great Depression, employees were offered a pension so that they could be taken care of out of employment. The purpose was to reduce overhead and had they refused the pension, they would have been fired. So too with Katz. This is different from another case where the person had announced his retirement then was offered a promise. There could have been no detriment because that was already his plan.
In other words, Katz relied on the promise resulting in a detriment to his income and ability to work. He met the element and is entitled to the pension.
Takeaway
The doctrine is stated very straightforward. There must be a promise, a detrimental reliance, and an injustice if not enforced. Here, Katz met those elements and was entitled to the promise.
Additional Notes
The defendants argued that there was no detriment because everything done for the plaintiff was for his benefit. He had gained 40,000 and a free trip to Hawaii.
Although the term Detrimental Reliance is not used in §90 of the Restatement, it can still be applied.
He gave up work because of the promise. Thus, his action was induced by the promise.
There was a promise under §2(1).
Compare the difference between the following: They are parallel for the most part.
§87(2): Option Contracts
An offer
Reasonably expect to induce an action or forbearance
Substantial character
Induce such an action or forbearance
Is binding as an option contract to avoid injustice
§90(1)
A promise
Reasonably expect to induce an action or forbearance
Is binding if injustice can be avoided by enforcement of that promise
Aceves v. U.S. Bank, N.A.
120 Cal. Rptr. 3d 507 (2011).
Aceves is the plaintiff. Lost in the trial court and appealed.
Question
Does the doctrine of promissory estoppel apply?
Rules
A promissory estoppel is:
- A clear and unambiguous promise
- Definite enough fro the court determine scope of duty and limits of performance.
- Reliance on the promise
- Reliance must be reasonable and foreseeable
- Could this reliance have been expected?
- Injury from reliance (Detriment)
- Sacrificed benefits due to reliance
Holding
Yes there was promissory estoppel. Judgement reversed.
Facts
The plaintiff was a homeowner in 2008 when they were unable to pay their monthly housing payment. They defaulted and filed for bankruptcy using chapter 7 (assets are to be liquidated to pay debts, including home). There was a stay of foreclosure and the plaintiff planned on moving from a chapter 7 to a chapter 13 bankruptcy (reorganize assets if there is a regular income, option to restore payments as they were previously, keep home).
However, the bank promised that if the plaintiff did not move to a chapter 13 and let the foreclosure stay lift, they would negotiate for better terms. Doing so, the plaintiff did not object to the motion to lift the stay. The bank proposed one offer which was refused then auctioned the home. Plaintiff filed suit for promissory estoppel fraud.
Analysis
Lets take each element one by one:
First, there was a clear and unambiguous promise to negotiate. The promise was not to provide an offer. Therefore, the offer made and rejected right before the auction could be seen as a violation of the promise to negotiate.
Second, reliance on the promise was shown by not changing the bankruptcy filings, relying on income, and not objecting to the foreclosure stay.
Third, it is reasonable for the plaintiff to have accepted this offer from the bank. This is because the bank was offering to negotiate a better deal than the plaintiff would have obtained under a chapter 13 bankruptcy filing (modified lessor loan instead of same initial loan). Thus, it is reasonable and foreseeable the the plaintiff could have been enticed to rely on the promise.
Finally, there was an injury. This is because the plaintiff sacrificed several of the rights she was entitled to under chapter 13 bankruptcy filings (more time to “cure” the default, prevent foreclosure, even the right to transfer from a chapter 7 to chapter 13). Even if she would have lost, the ability to try was taken away.
Takeaway
This appears to be a reiteration of the previous case. This just shows how the doctrine of promissory estoppel applies not only to family and charitable promises, but also commercial promises.
Additional Notes
It is important to understand what was going on at the time. There were several of people who were in this exact same circumstance at the time. There was a lot of confusion at the time that resulted in several similar cases.
Vestal says that this is a reasonable conclusion because the defendants would have known about the numbers not working out and the amount of cases that needed to settle.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
