Langer v. Superior Steel Corp.

Superior Court of Pennsylvania · 1932 · Contracts

ContractsConsiderationPromissory Estoppelassumpsitpension promiseforbearancenoncompetitionloyalty condition

Facts

When plaintiff retired from active duty as superintendent of defendant's annealing department, defendant's president sent him a letter stating that he would receive $100 per month for life so long as he preserved his present attitude of loyalty to the company and its officers and was not employed in any competitive occupation. Defendant paid $100 per month for approximately four years and then notified plaintiff that it would no longer continue the payments. In his statement, plaintiff alleged that he complied with the terms of the agreement and refrained from seeking employment with any competitive company. The case came up on defendant's statutory demurrer, so those allegations were taken as true.

Issue

Did the letter promising monthly payments for life, conditioned on plaintiff's continued loyalty and refraining from competitive employment, create an enforceable contract rather than a mere gratuitous promise? Alternatively, was the promise enforceable under promissory estoppel because plaintiff refrained from seeking competitive employment in reliance on it?

Rule

A promise is supported by sufficient consideration when, at the promisor's request, the promisee does or forbears to do something he has a right to do, even if the promisee has an option whether to perform and even if there is no actual loss to him or benefit to the promisor beyond the requested forbearance. In deciding whether language of condition is consideration or merely a condition on a gift, a useful aid is whether the happening of the condition would benefit the promisor; if so, it is a fair inference that the promisor requested it as consideration. Also, a promise that the promisor should reasonably expect to induce definite and substantial action or forbearance, and that does induce such reliance, is binding if injustice can be avoided only by enforcement.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Pittsburgh, Mercer Foundry sent retired plant manager Daniel Reeve a letter promising him $1,200 per month for life "so long as you do not work for any ironworks competing with Mercer in western Pennsylvania." Daniel accepted the payments and turned down a job offer from Keystone Meltworks in Erie for three years before Mercer stopped paying.

Is Mercer’s promise most likely enforceable as a contract?

Explanation. A promise is supported by consideration when, at the promisor’s request, the promisee forbears from doing something he has a right to do. The majority reasoned that refraining from competitive employment is a sufficient detriment even if the promisee had the option whether to accept the arrangement and even if no actual loss or measurable benefit is proved. Because the noncompetition condition benefits the promisor, it is fairly inferred to be requested as consideration rather than merely attached to a gift.