Class 14: Promissory Estoppel & Promissory Restitution

Consideration · Oct 19

Non-bargain bases for enforcement: R2d §§ 86, 90

By the end of class, you can

Apply R2d § 90's four elements (promise, foreseeable reliance, actual reliance, injustice) to a quit-job-style reliance fact pattern.
Apply R2d § 86's material-benefit rule to a post-rescue promise and decide whether subsequent promise is enforceable.
Distinguish promissory estoppel from promissory restitution by mapping each doctrine to the operative fact pattern.

Today

Floor. ~40 min: R2d § 90 + Conrad. The doctrine the next class assumes you have covered.

Target. ~75 min: Floor + Ricketts + R2d § 86 + synthesis.

R2d § 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.

R2d § 86: Promise for Benefit Received

A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. The promise is not binding if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched, or if the value of the promise is disproportionate to the benefit.

Two tracks to enforcement without bargain

Two parallel tracks: R2d sec.90 promissory estoppel (promise, foreseeable reliance, actual reliance, injustice) and R2d sec.86 promissory restitution (prior benefit, unjust enrichment, proportionality), both reaching enforcement without bargain. — R2d § 90 asks what the promisee did after the promise; R2d § 86 asks what the promisor received before it.

Conrad v. Fields

2007 WL 2106302 (Minn. Ct. App. July 24, 2007)
Minnesota Court of Appeals

Rule. Promissory estoppel requires a clear and definite promise, foreseeable reliance, actual reliance to the promisee's detriment, and injustice that can only be avoided by enforcement. Tuition for a course of study undertaken in reliance is a recoverable detriment.

Ricketts v. Scothorn

57 Neb. 51, 77 N.W. 365 (1898)
Supreme Court of Nebraska

Rule. A gratuitous promise that induces foreseeable, substantial action in reliance becomes enforceable to the extent justice requires. Reliance can supply what bargain does not.

The limits of promissory estoppel

R2d § 90 is an exception, not a substitute for consideration. Three limits keep it narrow:

*Reliance must be induced by the promise. A retiree who had already decided to retire did not rely on a later pension promise — no causal link (Hayes v. Plantations Steel).

Reliance must be reasonable and foreseeable. A husband who borrowed for his business could not estop his ex-wife on a support compromise; she could not have foreseen that use (Otten v. Otten).

Injustice must require enforcement. Even real, foreseeable reliance can lose if equity does not demand it — and equity does not reward a party with unclean hands (the delinquent husband in Otten*).

Drake v. Bell

26 Misc. 237, 55 N.Y.S. 945 (Sup. Ct. App. Term 1899)
New York Supreme Court, Appellate Term

Rule. Where a benefit has been conferred under circumstances showing an expectation of payment, and the recipient promises to pay after receiving the benefit, the promise is enforceable. Mistake in the identity of the benefited party does not defeat recovery when the actual recipient knowingly accepts and promises.

Mills v. Wyman

20 Mass. (3 Pick.) 207 (1825)
Supreme Judicial Court of Massachusetts

Rule. A moral obligation alone is not sufficient consideration to support a promise. A promise to pay for benefits already conferred to a third person (here, an adult son) is unenforceable for want of consideration.

Webb v. McGowin

27 Ala. App. 82, 168 So. 196 (1935)
Alabama Court of Appeals

Rule. Where the promisee has materially benefited the promisor by an act done at risk to the promisee, a subsequent promise to pay for that benefit is enforceable; moral obligation can support such a promise when accompanied by a material benefit previously received.

The material-benefit rule and its limits

R2d § 86 enforces a promise made in recognition of a benefit previously received — but only "to the extent necessary to prevent injustice," and subject to two cut-offs:

Gift exception (§ 86(2)(a)). If the benefit was conferred as a gift, or the promisor was not in fact unjustly enriched, the later promise is not binding. Mills fails here: the father got no material benefit; the care went to his adult son.
Disproportion (§ 86(2)(b)). Enforcement is capped where the promised value is disproportionate to the benefit. The promise binds up to the value of the benefit, not beyond.

The line Webb draws: a material, pecuniary benefit to the promisor (his life and body), later acknowledged by promise, is enforceable. A bare moral obligation (Mills) is not.

Worked example: Problem 8.1, The Escaped Bull (Boothe v. Fitzpatrick, 36 Vt. 681 (1864))

Fitzpatrick''s prized bull escapes and wanders eleven miles to Boothe''s pasture. Boothe feeds and shelters the bull for two months while trying to find the owner. In November, Fitzpatrick acknowledges ownership, says he will pay for the care, but cannot retrieve the bull until spring. Boothe keeps the bull through the winter. In spring Fitzpatrick takes the bull home and refuses to pay Boothe''s reasonable bill.

Q. Is Fitzpatrick''s November promise enforceable?

Stretch: second hypothetical

Vary one fact. In Conrad v. Fields, the would-be student turned down a different, definite job offer in reliance on the promise. Does R2d § 90 reach further when the reliance is positive (taking on new burdens) than when it is negative (declining an alternative)?

Stretch: practice problem

Stretch problems from the chapter.

Problem 8.1. Escaped Bull. See casebook Chapter 8.

Problem 8.2. Plantations Steel. See casebook Chapter 8.

Walk through the analysis on the board. Hit the rule, the elements, the line of authority, the answer.

Class summary

Rules. R2d § 90 (promissory estoppel — forward-looking reliance), R2d § 86 (material-benefit rule — backward-looking benefit).

Cases. Conrad v. Fields · Ricketts v. Scothorn · Drake v. Bell · Mills v. Wyman · Webb v. McGowin.

Punchline. Two non-bargain tracks reach enforcement. § 90 protects reliance the promise induced; § 86 disgorges a benefit the promisor already received. Neither enforces a bare moral obligation, and both stop at "injustice."

Open question. Both § 90 and § 86 stop short of saying every reliance-based or benefit-based promise is enforceable. What does 'injustice can be avoided only by enforcement' mean as a limit? The capstone class returns to this.

Next time

Next class: Module III Capstone: Consideration & Alternatives

_Consideration_ · Oct 20

Module quiz, debrief, and Promissory Estoppel drafting exercise. The capstone runs three doctrines side by side: bargain (R2d § 71), reliance (R2d § 90), and material benefit (R2d § 86). Bring a one-line answer: when none of the three is available, why does the law refuse to enforce? Come ready to answer. You may be called.