Supp. To § 1.13 What Is a Promise?

[Go To Main]

(A) The following cases cite this section:

(1) Sully-Miller Contracting Co. v. Gledson/Cashman Constr., Inc., 103 Cal. App. 4th 30, 126 Cal. Rptr. 2d 400 (Ct. App. 2002) . The plaintiff building material suppliers sued the general contractor, its surety, and the school district to recover for unpaid materials. The plaintiffs signed documents drafted by the contractor's attorney stating that the plaintiffs would dismiss the suit and release all claims against the defendants in exchange for final payment. The documents evidenced only the plaintiffs' signatures and did not specify which defendant would make the payments. When two months passed and no payments were made, the plaintiffs notified the contractor that they were withdrawing their offer to settle. Five months later, the contractor tendered checks to the plaintiffs in the amounts stated in the documents. The plaintiffs refused tender and the contractor moved to enforce the documents which it characterized as a settlement agreement. The plaintiffs claimed that the documents constituted a unilateral offer to settle which was revoked prior to acceptance and, in any event, did not have the signatures of all parties as required by the rule of civil procedure applicable to settlement agreements. The trial court permitted the contractor to sign the documents and entered judgment pursuant to its terms. The appellate court reversed. As this treatise explains, a bilateral contract requires mutual promises. The documents at issue contained only promises made by the plaintiffs and none by the defendants. They therefore constituted only an offer that was revoked. Moreover, the applicable rule of civil procedure allowed for enforcement of a settlement agreement only where unequivocal evidence of the parties' intent to enter into such a binding agreement was found. A belated signature did not meet this requirement. This case is also cited at § 1.23.

(2) In Re Worldcom, Inc., 2007 Bankr. LEXIS 494, 47 Bankr. Ct. Dec. 249 (S.D.N.Y. 2007) . The debtors argued that even if a lien filed against them was valid when filed, it lapsed when the creditor failed to bring a suit to foreclose it within the statutory period required by Nebraska law. The creditor alleged that after it received the debtors' disclosure statements, counsel for the debtors stated to the creditor,''if you have a lien you are fine.'' The creditor claimed that this statement conveyed the material misrepresentation that creditor was not required to take any further action to be paid in full. Thus, the creditor detrimentally relied on this statement by not taking action to insure that the lien would not lapse. The court explained that the elements of equitable estoppel are a material misrepresentation, reasonable reliance, and provable damages. Citing Corbin, it further explained that ''a promise is an expression of an intention that the promisor will conduct himself in a specified way or bring about a specified result in the future, communicated in such a manner to a promisee that he may justly expect performance and may reasonably rely thereon.'' The court found that the debtors never stated that the creditor was not required to take any action to protect the lien, and the creditor was responsible for protecting its own interest. Thus, even taking the evidence in the light most favorable to creditor, the court concluded that creditor's allegations failed to meet the requirements of equitable estoppel.

(B) The following cases are noteworthy:

(1) CenCor, Inc. v. Tolman, 868 P.2d 396 (Colo. 1994) . Thirty-eight former students of the Colorado College of Medical and Dental Careers sued the College for breach of contract, breach of express warranties, unjust enrichment, and promissory estoppel, and several negligence claims which the trial court characterized as ''educational malpractice,'' a theory of recovery not available in Colorado.

Colorado courts have generally rejected contract claims attacking the general quality of education, as raising questions concerning the reasonableness of conduct by educational institutions that must be answered by reference to tort concepts. However, on the basis of the law of contracts Colorado courts have upheld claims alleging that educational institutions fail to provide specifically promised educational services.

In one of their claims for relief plaintiffs asserted that provisions of the enrollment agreements and the College's catalog constituted express terms and conditions of a contract and that the College breached the contract by failing to provide specific educational services promised in the catalog. These promises included one that plaintiffs would be trained on up-to-date equipment and instruments, that they would be working under the supervision of qualified faculty, and that computer, word processing and typing would be a part of the curriculum. The College also promised one plaintiff that it would provide her with English language instruction, and others that it would permit students to repeat course work at no extra cost.

The Colorado Supreme Court concluded that to the extent these obligations constitute educational services for which the plaintiffs paid and the College failed to provide, the plaintiffs' claim alleges a breach of contract claim distinct from the general allegations of unreasonable conduct that characterize the negligence claims. The court thus affirmed the court of appeals' judgment that the trial court erred in entering summary judgment for the College.

(2) McReynolds v. Prudential Ins. Co., 276 Ga. App. 747, 624 S.E.2d 218 . A divorce settlement included the husband's agreement to maintain an insurance policy which named his wife as the primary beneficiary. The plaintiff sought assurance from the defendant insurer that she would be notified of any changes in the policy that might affect her rights. The defendant stated that it would ''consider'' the terms of the divorce decree in making judgments to pay under the policy. The husband changed the beneficiary. After his death, the plaintiff sought to recover from the defendant under a promissory estoppel theory. The court held that the defendant's statement that it would ''consider'' the decree in making decisions about payments under the policy was nothing more than an agreement to think about the issue seriously. When a party agrees to ''consider'' an issue, she is free to make any decision she chooses about that issue. Since the defendant never agreed to act or refrain from acting in a specified way, the defendant's statement was not a ''promise'' as defined in the Restatement (Second) of Contracts, § 2, upon which the plaintiff could rely. This case is also discussed in § 8.12 of the supplement.

(3) Bondie v. Robert Saltsman and Novodynamics, Inc., 2006 Mich App. LEXIS 496 . The plaintiff's employment as a vice president of the defendant corporation was terminable-at-will. A subsequent resolution of the defendant's board of directors, however, precluded the dismissal of any officer of the corporation that included vice presidents from being dismissed absent the approval of the board. Fourteen months later, the plaintiff was dismissed without board approval. In the plaintiff's action for wrongful termination, the trial court granted summary disposition to the defendants. On appeal, the instant court recognized that parties are free to bind themselves to whatever termination provisions they choose. The issue before the court was whether the plaintiff had a legitimate expectation that she could not be terminated without board approval. In determining such expectations, the court stated that the first step was to determine what, if anything, the employer has promised, i.e., did the employer manifest an intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made? (Restatement (Second) of Contracts, § 2(1)). The court concluded that reasonable minds could differ as to whether the defendant corporation promised the plaintiff that she could not be terminated without board consent. Reasonable minds could also differ as to whether the board resolution created a reasonable expectation in the plaintiff that she could not be dismissed absent board consent. The court reversed the summary disposition below and remanded the case for further proceedings on these issues.

(4) Davey v. Jones, 2007 U. S. Dist. LEXIS 35965 (S.D.N.Y. 2007) . When the plaintiff was discharged from his employment, the defendant employer offered a payment of $20,000 in exchange for a waiver of any claims the plaintiff might have against the defendant. The plaintiff asked about the duration of the offer and was told there was no time limit. Subsequently, the defendant revoked the offer. The plaintiff claimed that the revocation was ineffective because there was consideration to keep the offer open in his forbearance from bringing suit. The court recognized that a promise to forbear suit could constitute consideration to keep an offer open, but there was no evidence of any promise or understanding to that effect. A promise must be manifested in some fashion as defined in § 2 of the Restatement (Second) of Contracts. As the main volume indicates, a promise may be tacit, implied or inferred as well as express. There must, however, be evidence that would lead a reasonable party understand that such a promise was made. The plaintiff's secret and unilateral decision not to bring suit could not supply the necessary consideration to keep the offer open.