George Mason School of Law
Contracts I
Promissory Estoppel
F.H. Buckley
fbuckley@gmu.edu
1
Estoppel
 Estoppel by representation of fact
 Promissory estoppel
2
Estoppel: An Ideological Battle?
Oliver Wendell Holmes
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Samuel Williston
Arthur Corbin
Promisory Estoppel and Reliance
A sword, not a Shield
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Ricketts v. Scothorn
 I assume you were as distressed as I
was at this example of male
chauvinism…
5
Ricketts v. Scothorn
 Was there consideration given by
Katie for the promise?
 What was the reliance?
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George Mason School of Law
Contracts I
Promissory Estoppel
F.H. Buckley
fbuckley@gmu.edu
7
Exam
 Writing by laptop
 Four questions, Two hours…
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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
What kind of reliance is
needed?
 Suppose I promise you $1,000,000
and, believing me, you feel
overjoyed.
 Have you relied?
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Psychic Reliance
What happens when the cheque bounces tomorrow…
Happy,
Happy,
Joy, Joy
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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.
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Haase v. Cardoza
 Was the promise supported by
consideration?
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Haase v. Cardoza
 Was the promise supported by
consideration?
 What about reliance?
14
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
Haase v. Cardoza
 What about reliance?
 Present Restatement § 90 conditions
relief: “injustice can be avoided only
by enforcement.”
 What does that mean?
16
Wright v. Newman (p. 160)
 How would you decide this?
 What was the reliance?
17
Why might a promisor want to
incur legal liability?
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Why might a promisor want to
incur legal liability?
 And why might he not?
 In a case such as Haase…
19
Why might a promisor want to
incur legal liability?
 And why might he not?
 Cf. Ricketts
20
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
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
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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?
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The Employment Context
 Feinberg v. Pfeiffer
 What was the promise and why was it
made?
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The Employment Context
 Feinberg v. Pfeiffer
 What was the promise and why was it
made?
 What was the reliance?
25
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?
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Why a different result in Hayes?
27
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
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Why a different result in Hayes?
 Did Hayes have a bad lawyer?
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Why a different result in Hayes?
 Did the promisors intend to assume
legal liability in this case? In
Feinberg?
30
Chartiable Subscriptions
 Salsbury v. Northwestern Bell
 Charles City College operated from 1967 to
1968. 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)
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Chartiable Subscriptions
 You and I meet and agree that we will
both donate $5,000 to a college
 Consideration?
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Chartiable Subscriptions
 I pledge $1,000,000 to a college
which promises to name a building
after me
 Consideration? Allegheny College
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Allegheny
College
Chartiable Subscriptions
 Salsbury v. Northwestern Bell
 Did Salsbury rely on the subscription?
 Restatement § 90(2)
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Chartiable Subscriptions
 Salsbury v. Northwestern Bell
 Are you satisfied with the rationale?
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Charitable Subscriptions
 Can you reconcile Salsbury with
DeLeo?
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Charitable Subscriptions
 Can you reconcile Salsbury with
DeLeo?




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Illness
Fiduciary relationship
Oral promise
Storage room?
Charitable Subscriptions
 Should such promises automatically
be binding?
 Is that what 90(2) requires?
 Comment f
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Charitable Subscriptions
 Why so few such cases?
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The Material Benefits Rule
 Webb v. McGowin p. 191
W.T. Smith Lumber Co., Chapman AL
40
The Material Benefits Rule
 Webb v. McGowin
J. Greeley McGowin
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The Material Benefits Rule
 Webb v. McGowin
 Recall Bailey v. West
 Is Webb a suitable case for relief in quasicontract?
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The Material Benefits Rule
 Webb v. McGowin
 Recall Bailey v. West
 Is Webb a suitable case for relief in quasicontract?
 What did the promise add?
43
The Material Benefits Rule
 Webb v. McGowin
 Treat this as a contracts case. Is there a
consideration problem?
44
The Material Benefits Rule
 Webb v. McGowin
 Treat this as a contracts case. Is there a
consideration problem?
 The past consideration rule
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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
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The Material Benefits Rule
 Webb v. McGowin
 Can you distinguish it from Mills v.
Wyman: p.192?
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The Material Benefits Rule
 Webb v. McGowin
 Can you distinguish it from Mills v.
Wyman?
 What about Boothe v. Fitzpatrick (p. 198)
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The Material Benefits Rule
 Previously binding promises
 Restatement § 82
 Statute of Limitations
 Restatement § 83
 Debt discharged in bankruptcy
 Restatement § 85
 Voidable duties
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The Material Benefits Rule
 Pitching ideas: Desny v. Wilder p. 193
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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?
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Irrevocable Offers
 The consideration requirement
amounts to a presumption against
irrevocable offers
 Why does this make sense?
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Irrevocable Offers
 The consideration requirement
amounts to a presumption against
irrevocable offers
 When doesn’t it make sense?
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Irrevocable Offers
 The consideration requirement
amounts to a presumption against
irrevocable offers
 What purposes are served by option
contacts?: Restatement §§ 25, 37, 87(1)
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Irrevocable Offers
 The consideration requirement
amounts to a presumption against
irrevocable offers
 What purposes are served by option
contacts?
 Hedging strategies
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Irrevocable Offers
 The consideration requirement
amounts to a presumption against
irrevocable offers
 What purposes are served by option
contacts?
 Compensation schemes
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Irrevocable Offers
 The consideration requirement
amounts to a presumption against
irrevocable offers
 What purposes are served by option
contacts?
 Land assembly and hold-outs
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Irrevocable Offers
 The consideration requirement
amounts to a presumption against
irrevocable offers
 What purposes are served by option
contacts?
 Pre-contractual reliance expenditures
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Irrevocable Offers
 The Brooklyn Bridge example: p. 232
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Irrevocable Offers
 Legal restrictions on the right to
revoke an offer?
 Revocation not effective unless communicated:
Restatement § 40
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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
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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)
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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
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
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
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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?
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Irrevocable Offers
 Legal restrictions on the right to
revoke an offer?
 Firm offers under UCC § 2-205
 Is this related in any way to offeree reliance?
67
Construction Contracts
Client
General Contractor
Sub-contractor
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Pavel v. Johnson p. 234
NIH
PEI (Pavel/HVAC)
Johnson (Kick)
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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
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
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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?
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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
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
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
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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?
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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?
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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?
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Good luck!
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