The agreement between Cato and Isabella is what is known as a gratuitous promise. A gratuitous promise is an agreement between two parties, a promissor and promisee; that places an obligation on the person accepting the promise but the person making the promise does not receive anything in return (Blum, 2013). In this case, Isabella (the promissee) is obligated to graduate from State College in order to receive the US $40,000. On the other hand, Cato (the promissor) receives little, if anything, of value in the agreement. The answer to the question of whether or not Isabella can enforce Cato’s gratuitous promise depends on finding out some more details of the circumstances surrounding her attendance at State College.
Under the traditional theory of contracts, in order for a contract to be a legally enforceable agreement there needs to be an exchange between two parties brought about through bargaining. The exchange results in a promise and consideration. Consideration refers to a reciprocal promise or a promised action by a party that they did not already have a pre-existing duty to abide by or carry out (Blum, 2013). According to the tradition theory of contracts, if one party simply makes a promise to another, there can be no consideration. Accordingly, the promise cannot be enforced. The 1845 Kirksey v. Kirksey case provides an illustrative example of this theory. In Kirksey, a man promised his brother’s wife that she could live with him after his death. Upon her husband’s death, the wife packed up and moved to her brother-in-laws only to learn that he would not allow her to stay. The wife then sued for breach of contract. The court, finding for the brother-in-law, held that although the wife relied on the brother’s promise there was no bargained for exchange. In short, the brother made a gratuities promise without and consideration. Kirksey is therefore applicable to the case of Cato and Isabella. To be sure under Kirksey (and the traditional theory of contracts), Isabella cannot enforce Cato’s promise. First, there was no bargained for exchange; Cato simply made a promise.
While the traditional theory of contracts rules out enforcement, as mentioned above, Isabella might still be able to enforce Cato’s promise if more details about here circumstances are made known. Promissory estoppel or detrimental reliance is a doctrine in contract law that allows a party to enforce the promise of another party even though there was no consideration. Under promissory estoppel, courts have enforced promises when: (1) a party (promissor) makes a promise to induce the action of another party to his detriment, and (2) the receiving party (promissee) actually acts in reliance to the promise (Blum, 2013). The 1965 Hoffman v. Red Owl Stores case is an illustrative example of promissory estoppel. In Hoffman, Hoffman was a bakery store owner seeking to expand his income. To accomplish this, he applies to Red Owl Stores to run one of their franchise grocery stores. Red Owl Stores promises to let the Hoffman run a franchise store if he completes a number of interim steps including buying a small store with his own funds to gain experience, selling his bakery and making multiple investments to Red Owl Stores. Eventually, Red Owl Stores said in order to get franchise, he would have to agree that a prior investment made to Red Owl Stores was a gift. Hoffman balked and sued Red Owl Stores for restitution and damages. In finding for Hoffman, the court Red Owl Stores’ promise was enforceable. According to the court, Red Owl Stores should have known that its promise would have induced Hoffman to act accordingly.
Moreover, their promise did actually induce Hoffman to act. Lastly, Hoffman’s actions were in reliance to the promise and resulted in his being disadvantaged. Again, Hoffman is applicable to Isabella and Cato’s case. It is clear that Cato should have realized his promise would induce Isabella to act. Second, she did indeed; act according to or in reliance of Cato’s promise. The only question is if Isabella was disadvantaged by her reliance on the promise. On the one hand, getting a college education can be argued as a benefit in that she upgrades her ability and knowledge to work and survive in the world. On the other hand, she might have suffered financially if she had to pay for the college herself. Finally, there are the opportunity costs of spending four years’ worth of time in college. Accordingly, if Isabella can show that she suffered some injury based on her reliance on Cato’s promise, under Hoffman, she should be able to force Cato to pay her the US $40,000.
Blum, B. (2013). Examples and Explanations: Contracts (6th ed.). New York, NY: Wolters Kluwer Law & Business.
Castro, W.R., & Ricks, V. D. (2006). “Dear sister Antillico”: The story of Kirksey v. Kirksey. Retrieved on October 27, 2014, from http://ssrn.com/abstract=899002
Hoffman v. Red Owl Stores, 133 N.W.2d. 267 (1965). Retrieved on October 27, 2014, from http://www.scienzegiuridiche.uniroma1.it/sites/default/files/docenti/alpa/Hoffman.pdf
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