Promissory Estoppel: Key Concepts and Case Analysis

1. Reliance Contracts – Prof. Merges Sept. 8, 2005

2. Ricketts v. Scothorn

4. Ricketts v. Scothorn • Procedural History

5. What Cause of action did π name in complaint?

6. What Cause of action did π name in complaint? • Breach of contract • Consideration mentioned?

7. What Cause of action did π name in complaint? • Breach of contract • Consideration mentioned? • “the consideration for the execution of the note was . . .” • P. 89, middle

8. Ricketts v. Scothorn • Key facts

9. Ricketts v. Scothorn • Key facts • Katie Scothorn’s statements and actions after her grandfather made his promise • The fact that she soon after accepted another job?

10. Ricketts v. Scothorn • Why “nothing to submit to the jury”?

11. Ricketts v. Scothorn • Why “nothing to submit to the jury”? • Consideration analysis • Agree? Even if not, a good summary of the doctrine – p. 90, middle

12. “I have fixed out something that you have not got to work any more . . .”

13. Rest. 2d, § 71: Requirement Of Exchange; Types Of Exchange (1) To constitute consideration, a performance or a return promise must be bargained for. (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise AND is given by the promisee in exchange for that promise.

14. It’s simple: “reciprocal mutual inducement,” that’s the key!

15. Promise to make a gift • Ordinarily, not enforceable [p 90] – BUT . . .

16. What makes such a promise enforceable? • “on the faith of which money has been expended or obligations incurred . . .”

17. How does this concept relate to estoppel terminology? • What is an “estoppel” generally?

18. How does this concept relate to estoppel terminology? • What is an “estoppel” generally? • “to be precluded by one’s own previous statement or act from doing or alleging something”

19. “estoppel in pais”?

20. “estoppel in pais”? • Estoppel “in the country,” i.e., outside of court – arising from actions and statements apart from a formal legal proceeding

21. Estoppel  Reliance • Who is estopped from what? • How does this bring reliance into it?

22. Estoppel  Reliance • Who is estopped from what? • How does this bring reliance into it? • CHANGE OF POSITION

23. Katie’s reliance • Note 1, p. 88 • Compare Rest. § 90, p. 93, with Rest. 2d § 90, p. 95 • “of a definite and substantial character” • “such action or forbearance”

24. § 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.

25. Charitable Subscriptions • Allegheny College, p. 93 • Cardozo again

26. Feinberg v. Pfeiffer • Change of position = quitting a job • Enough to bind the promisor

27. Problem, p. 97 • Reliance as a basis for enforcement (consideration substitute) • Reliance as a measure of recovery

31. Cohen wins • But how much? • Out of pocket? Reliance as a ceiling? Measure of damages . . .

32. South Bend

33. South Bend French Lick

34. D&G Stout v. Bacardi • Facts

35. Procedural History • What is the holding?

36. What is the reliance argument?

37. Amount of damages • What does the $550,000 represent?

38. Robert A. Hillman, Questioning the "New Consensus" on Promissory Estoppel: An Empirical and Theoretical Study, 98 Colum. L. Rev. 580, 582 (1998).