Last time, we talked about Kirksey and Kirksey, where the court deemed a promise a mere gratuity, because the promise lacked consideration. Today, we will continue to discuss consideration. This time we'll examine Langer versus Superior Steel Corporation, a case that is explicitly distinguished from Kirksey. And which presents an interesting transition case in the understanding of consideration. In discussing Langer, we'll also revisit the concept of promissory estoppel, which we saw earlier in the introductory case Ricketts versus Scothorn. The Langer case was decided by the Pennsylvania Superior Court in 1932. First, let's quickly recap Kirksey and Kirksey. There we saw a gratuitous promise is not an enforceable contract, because contracts require consideration. Moreover, a detriment caused by the a promisee's reliance on the promise does not itself constitute consideration if it's not bargained for. In this case, the Superior Steel Corporation determined to replace Langer, the plaintiff, as foreman of one of its departments. Langer had worked for the company for over 30 years. Langer received a letter from the company. The letter stated that the company would pay him a pension of $100 per month, as long as the plaintiff preserved his present attitude of loyalty to the company, and its officers. And was not employed in any competitive occupation. The plaintiff did not go to work for a competitor, and Superior still made the pension payments described in the letter. Around four years later, however, the company stopped making the payments. So the plaintiff sued for enforcement of the terms of the letter. The trial court found in favor of the company on demur, sustaining questions of law the company had raised. But the instant court reversed, and remanded the case for a new trial. The issue is this, was the company's promise to pay supported by consideration? Well, by now we know that enforceable contract requires considers consideration. How should a court determine whether there is consideration? Kirksey did not offer much guidance on this question it was just a three sentence opinion. So let's compare some definitions, the restatement of contracts first which was published the same year, indeed within the same weeks as the opinion issued in Langer. Defined consideration in section 75 as, an action other than a promise, or a forbearance, or the creation, modification, or disruption of a legal relationship, or return promise bargained for and given in exchange for the promise. An interesting example of consideration is given in the comments. A promises B $500 when B goes to college, this can be understood in a couple of ways. Say a mother really wants her rebellious teenage son to go to college. But her son does not want to plan on doing so. In that scenario the mother's promise to pay is supported by consideration, she's bargaining for her son to go to college. But what if her mother assumes her son is going to college and treats that departure for college as a kin to say an 18th birthday, an occasion for celebration, not for bargaining. If the promise isn't made as an agreed exchange for her son's going to college. But is a conditional gift payable on his departure, this wouldn't be consideration for a promise. The first restatement's definition might seem counter to the result we saw in Kirksey. The plaintiff abandoning her land and moving to her brother-in-laws seemed at first to fit it. But comment c to this section states in part that quote, the fact that the promisee relies on the promisee to his injury, or the promisor gains some advantage therefrom, does not establish consideration without the element of bargain or agreed exchange. Now, consider section 71 of the restatement of contracts second published in 1981. It states that to constitute consideration, a performance or return promise must be bargained for, we've been emphasizing this before. And the text then explains that to be bargained for a performance or return promise must be sought by the promisor in exchange for his promise, and is given by the promisee in exchange for that promise. This is also referred to as the inducement requirement, that one quid induces the quo and the quo induced the quid. Comment PB of this section further elaborates on bargaining, noting that in the typical bargain, the consideration and the promise bear a reciprocal relation of motive or inducement. The consideration induces the making of the promise, and the promise induces the furnishing of the consideration. But it's not enough that the promise induces the conduct of the promisee or that the conduct of the promisee induces the making of the promise. Both elements must be present or there is no bargain so says the comment to restatement second. Now, how did the court explain consideration in the Langer opinion? Well,the court cited Williston who wrote a famous treatise on contracts and who was a member of the committee creating the 1932 re-statement of contracts. Williston offered a helpful, though not conclusive test for determining whether a condition included in an offer constituted consideration for the offer or was quote, a mere condition in a gratuitous promise, unquote. If the occurrence of the condition would benefit the promissor, it could be fairly inferred that the occurrence of the condition was requested as consideration. In other words, the fact that the condition would benefit the promisor, suggests that the promisor's promise was meant to induce the promisee's conduct. Applying this test to the condition in Superior Steel, that Langer quote, preserve his attitude of loyalty to the company and it's officers and not be employed in any competitive occupation. The court found that this would benefit the company and so suggested that it constituted sufficient consideration. Now let's consider by contrast Kirksey versus Kirksey, which the court distinguished from Langer's case. Remember that in Kirksey, a widow received a letter, like in Langer, but this time from her late husband's brother, advising her to sell her land. And telling her that if she came to where he lived, he would put her up in a home and let her have a place to raise her children. Because he wanted her and her children to do well. The widow did move and abandoned her land and her brother-in-law put her up for a couple years, but afterward requested her to leave. The three supreme court of Alabama determined that there was no consideration and that the defendant's offer was a mere gratuitous promise. Would the condition in the brother-in-laws offer survive Williston's benefit test? Well, no, the Kirksey court found it hard to see how the brother-in-law was benefited by her coming to live where he lived. But if you go back to the module we just had on Kirksey versus Kirksey. There's new history that suggests that maybe it could have even survived the benefit tests that Williston proposed. That maybe there was actually a hidden benefit for this brother-in-law in having her move to his land. But another way of think about inducement is to ask whether the parties contemplated mutuality of obligation. That is, whether they believed both parties were going to be bound to perform their obligations. If Langer believed he was obligated to refrain from what he otherwise could do, work for a competitor company. Then we might infer that there was a bargain for exchange, and not merely a conditional gift. If I say to you, I'll give you my old coat if you come by my house to pick it up, and you say, okay, neither of us thinks that you'll be in breach of contract if you fail to come by and pick it up. But the parties might have believed that Langer would be in breach if he went to work with a competitor. Though the court found that the company's promise was supported by consideration so as to create an enforceable contract. The court proposed alternative reasoning by which to enforce the Steel company's promise. This was the theory of Promissory Estoppel, which we discussed earlier in Ricketts versus Scothorn. A case which the Langer court cited as well. In addition to citing Rickets, the court quoted section 90 of the first restatement of contracts. Which said, a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character. On the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. Is the theory of promissory estoppel an alternative convincing basis for enforcing the terms of the steel company's letter? Well, probably yes, but the remedy might be limited to what justice demands. What about in Kirksey versus Kirksey? Would the logic of promissory estoppel have made sense in that case? Again the answer is yes, but as we discussed in the earlier module, it hadn't been developed then. So, what have we learned? We see that even minor requested performance which includes refraining from doing something can constitute consideration. Whether the performance is great is far less significant a question than whether the performance is bargained for. We also learned importantly that Williston's benefit test provides a useful means for evaluating and identifying whether a given condition was bargained for, or merely a gratuitous conditioned provision. And finally, we saw that promissory estoppel is potential alternative grounds for enforcement.
