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Vito may have done so in hopes of some day seeing themselves enriched, in which case their decision may amount to a raid on company funds.

Assuming that the motive was either a sense of fairness or a fear of insisting on one’s rights, then the question is which is more likely. The promisor is more likely to have been acting out of a sense of fairness if an event occurred that makes the adjustment seem fair. The event might be new information, a change in economic conditions, or a reason not to insist on timely performance or an architect’s inspection. Again, the action is more likely to have been motivated by a sense of fairness when the promisor was not threatened, and still more likely when he proposed the change himself or accepted it readily when the promisee proposed it. Similarly, he is less likely to have made the promise through fear when he can protect himself in other ways against the threat (for example, by suing for damages) or when the consequences he would suffer if the threat were carried out are less severe, or when the consequences he would suffer by performing his promise are less serious, as they may be, for example, when he waives the architect’s certificate.

The ultimate question is which situation we are confronting: one in which the promisor made a concession to adjust fairly a matter that the parties had not finally settled; or one in which the issue in question had already been settled in his favour, and in which he made the concession only because the promisee could do him harm. If that is what ultimately matters, it would seem that a court should examine all the considerations just described because they all bear on how it should be answered.

3. The absence of commitment

We examined two types of cases: those in which one of the parties was given the option of deciding whether to contract, or for what quantity; and those in which one of the parties committed himself to pay only if the other succeeded in producing a certain result.

a. Open terms and options

In one of our cases (Case 13), a party had the option to buy or not; in another (Case 8), he had the option of how much to buy. As we saw, although their doctrines are quite varied, most of the legal systems we examined protect the committed party against the danger that the other party will speculate at his expense, at least when he most needs that protection.

If, as before, a party should not be able to enrich himself at the expense

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of someone who does not wish to make him a gift, then we can see why most legal systems afford this protection. The principle is violated when one can speculate at another’s expense. To do so is like playing cards and deciding on the stakes at the end of the evening. On the other hand, options and open terms sometimes benefit even the party who is committed. They may increase the value of the contract to the uncommitted party and thereby increase the amount that the committed party can charge. They may benefit the non-committed party by allowing him to obtain information about the value of the performance to him which he does not currently have. In Case 13, the option enables him to conduct a study of the value of the land. In Case 8, it allows him to order steel only after he knows how much he will need. Without the opportunity to gain this information, he might not have been willing to contract, or to contract on terms as favourable to the committed party.

The straightforward approach would be to ask directly whether the arrangement actually did serve as a means of providing these legitimate benefits without allowing one party to enrich himself at the other’s expense. To make this determination, a court would ask first about the benefits: did the arrangement allow one party to remain uncommitted so that he could learn more about the value to him of the performance he was to receive? How important was this information? Second, a court would ask about the cost to the committed party of allowing the other party to remain uncommitted. It is small if there is little opportunity to speculate at his expense, as, for example if the option is short term or the quantity purchased corresponds to the buyer’s normal requirements or the market prices are generally stable. Third, a court would ask whether, because of an unexpectedly large change in the market price, the uncommitted party actually did use his freedom to speculate at the other party’s expense rather than to obtain the information he wanted. He did if he changed his plans because the market price rose and is buying for resale rather than to put the land or goods to his own use.

b. Promises conditional upon success

As we saw, most legal systems will enforce a promise to pay money conditional upon finding a necklace (Case 14) or finding a buyer for the promisor’s house (Case 15). The problem is whether the promisor can change his mind and announce that he will not pay before the necklace or a buyer is found.

In one respect, these promises may resemble those just considered. The point of them may be to allow one of the parties to learn more than he can

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know at the time he contracts. In the case of the options and open price terms, the uncommitted party learns more about the value of the performance he is to receive. In the case of the promises conditional on success, the promisee learns more about the difficulty of performing. It may be expensive or impossible to find the necklace or the buyer. Consequently, because of his lack of knowledge, the promisee may be unwilling to commit himself to do so. The promisor may be unwilling to pay the promisee merely for trying. Yet the promisee may be unwilling to try unless he has some assurance he will be paid. The solution is for the promisor to be obligated to pay but only if the promisee succeeds.

Here, however, the promisee is usually not able to speculate at the promisor’s expense. He is hardly likely to increase or decrease his efforts in response to a change in market prices. It would seem, then, that the one reason for caution in the case of options and open terms has disappeared. Why, then, should we not enforce all promises conditional upon success? And yet, as we have seen, many legal systems allow the promisor to withdraw.

The answer, it would seem, is that not all of the promises that are conditional upon success are a solution to the problem just described. That problem was how to deal with uncertainty about the difficulty and expense of making a performance. Because of that uncertainty, the promisee will not commit himself to succeeding, the promisor will not pay him merely for trying, and yet the promisee will not try (or try as hard) unless he has some assurance of being paid. Sometimes a promise conditional upon success is not made to give the promisee this reassurance. It may be that the promisee can perform without incurring any expense. He may already have information – for example, as to who stole the necklace or where it is now – and need only impart it. Or it may be that the promisee need not incur any extra expense. For example, the real estate agent may have incurred considerable expense establishing and publicizing his listings, but listing one more house does not cost any more. If so, it would be peculiar to hold the promisor to his promise if he changes his mind before anyone has claimed the reward. As in one class of cases considered earlier, a party is in a position to confer a benefit on another at no cost to himself. This time, however, so far as the promisor is aware, the promisee will not do so without a reward. In general, it is sensible to enforce a promise offering him a reward since, if it is unenforceable, the promisee may not confer the benefit. But if the promisee has not yet done so, it is hard to see why the promisor should be bound or why he would want to

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be. No one is either committing himself in return or incurring a cost in reliance on his promise.

Whether the promisor can change his mind should therefore depend on whether or not he made his promise, conditional on success, to induce the promisee to incur extra expense. The answer will depend upon the circumstances. It is probably in the negative in the case of the reward for the necklace offered in a newspaper advertisement. No one is likely to go to significant trouble and expense on the strength of such an offer. The same is probably true when the house is listed non-exclusively with a broker. Indeed, the broker may incur no extra expense at all. That may be why these promises are freely revocable in many legal systems. Nevertheless, the straightforward approach would be to ask whether, under the circumstances, the promise is made so that the promisee would incur trouble and expense in hope of earning the reward.23

23For an argument that the promisor should then be bound even if the promisee has not yet incurred the trouble and expense, see Gordley, ‘Enforcing Promises’, 603–7.