Summaries

252 the enforceabilit y of promises

terminate his employment before the time agreed upon, and while the employer has a right to sue for damages if he does, this right is almost never recognized by the courts. Since Vito therefore has the right to leave, the employer’s promise is valid if it is made causa credendi to induce him to stay.

In Case 10(b), the promise is made causa donandi and therefore it is not valid without the formality required for a gift.

Portugal: The promise is not enforceable because it is a gift and such promises must be made in writing. Nevertheless, if Vito has relied on the promise, there may be pre-contractual liability for violation of good faith since a promise was made and then broken knowing the promisee might rely on it.

Italy: In Case 10(a), the original promise to work for ten years would be void under Italian labour law, and so Company’s promise to induce him to stay would be valid.

In Case 10(b), the promise would probably not be considered a gift and so would be enforceable without a formality because Italian courts favour employees. Possibly, a court might consider it a ‘remunerative gift’ (one for past services) which does require the same formality as other gifts.

Austria: In Case 10(a), the promise will be enforceable unless it can be avoided for duress, which is unlikely since there is no indication that Vito actually threatened Company. The promise is not a gift since the employer will not be deemed to have acted purely out of generosity. Therefore the promise is enforceable without the formality required for a gift.

In Case 10(b), the promise is enforceable without a formality because it will be deemed to be part of Vito’s salary rather than a gift even though it is connected only with his past services.

Germany: In Case 10(a), the promise will be voidable for duress if Vito threatened to break his employment contract. Otherwise, it and the promise in Case 10(b) will be enforceable. Such promises are not deemed to be gifts even if made after retirement because they are related to the employee’s normal services and the employer’s loyalty to him.

Greece: In Case 10(a), the promise is enforceable since it will be considered a supplement to Vito’s salary.

In Case 10(b), the promise is enforceable even absent a formality since it is deemed a promise to perform a special moral duty.

Scotland: In Case 10(a), if the payment is made to prevent Vito from leaving, it is not gratuitous. Even if Vito had threatened to leave, the threat does not constitute duress.

In Case 10(b), the promise is gratuitous but enforceable absent a writing

because it was made in the course of business. If Vito bought a house, it is also enforceable because he relied on it.

England: In Case 10(a), it would once have been said that there is no fresh consideration. Recently, however, it has been held that there is consideration for a promise if the promisor receives a ‘practical benefit’ even if the benefit is the performance of a pre-existing legal duty. Here, Company gets a practical benefit if the increase in pay keeps Vito from leaving, and yet, if Vito had threatened to leave, the threat would constitute duress. A court might decide that Company did receive this practical benefit, and that there would be duress only if Vito actually threatened to leave. Vito’s reliance on the promise might influence what a court did.

In Case 10(b), the promise is unenforceable since Company did not receive a practical benefit.

Ireland: In Case 10(a), it would once have been said that there is no fresh consideration. Recently, however, an English court held that there is consideration for a promise if the promisor receives a ‘practical benefit’ even if the benefit is the performance of a pre-existing legal duty. This decision may not be followed in Ireland. If it were, a court might decide that the Company did receive a practical benefit by inducing Vito to stay. A court would not find there to be duress because Vito never threatened to leave. Even if the traditional approach were followed, the parties could make the new promise binding by first agreeing to discharge the existing contract and then agreeing to make a new one.

In Case 10(b), the promise is unenforceable because it lacks consideration. It could be made binding by having Vito promise some small undertaking in return, such as to retire early or not to compete with the company.

Preliminary comparisons

In one jurisdiction, Portugal, the reporter believed that the promise in Case 10(a) is not enforceable though there may be a remedy for violation of good faith. In all other jurisdictions, the reporters thought it would be enforceable. In three cases, the reason was that the initial promise to work for a fixed term was either invalid (Italy) or one which the employee was entitled to break though he would then be liable for an indemnity (Belgium) or for damages which, as a practical matter, the employer could not recover (Spain). The two common law reporters noted that at one time, the promise would have been unenforceable because it lacked consideration, but under the new English approach, which may be followed in

254 the enforceabilit y of promises

Ireland, it will be enforceable because the employer received a ‘practical benefit’. The Irish reporter observed that the parties could get around the traditional approach by first agreeing to cancel their contract and then agreeing to make a new one. In Italy, Belgium, and Spain, duress was not an issue because the employee had the right to leave. In Scotland, it was not because threatening to leave would not constitute duress. Elsewhere, it was not because Vito did not threaten to do so.

The promise in Case 10(b) would be considered a gift and therefore unenforceable without the required formalities in France, the Netherlands, Spain, and Portugal, although in Portugal there may be a remedy for violation of good faith. The promise would be unenforceable for lack of consideration in England and Ireland. It would be considered gratuitous in Scotland but nevertheless enforceable because it was made in the course of business (and even if it were not, if it had been relied upon). It would be enforceable as a promise to fulfil a natural or moral obligation in Belgium and Greece. It would be enforceable in Austria and Germany because it would be considered part of, or linked to, the employee’s past services. In Italy, it would be treated as a gift if it were regarded as payment for past services, but the Italian reporter believes a court would enforce it because Italian courts favour employees.