Contractspromissory estoppeldetrimental relianceconsiderationequitable estoppelestoppel in paisgratuitous promisepromissory note
Facts
John C. Ricketts gave his granddaughter, Katie Scothorn, a note promising to pay her $2,000 on demand with interest, telling her that she did not have to work anymore because none of his grandchildren worked. Scothorn then quit her job as a bookkeeper and remained unemployed for more than a year, relying on the note and its interest as support. Ricketts paid one year's interest, later expressed regret that he had not paid the balance, and never repudiated the obligation. The evidence showed that Scothorn made no promise in return and was not contractually bound to quit or remain out of work.
Issue
Can a promissory note given as a gratuity, without consideration or any promise by the payee, nevertheless be enforced when the maker intentionally induced the payee to change her position for the worse in reliance on the promise? More specifically, is the executor estopped from asserting want of consideration under these facts?
Rule
A gratuitous promise or promissory note ordinarily is unenforceable for want of consideration. But where the promisor's voluntary conduct, acts, or statements intentionally induce the promisee, acting in good faith, to change position for the worse in reasonable reliance on the promise, an equitable estoppel arises that precludes the promisor from asserting lack of consideration.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
In Omaha, Nora Lind gave her nephew Evan Pike a signed note stating, "I promise to pay Evan Pike $8,000 on demand." As she handed it to him, she said, "You can leave that warehouse job now; I want you to stop working so hard." Evan quit the next week and remained unemployed for six months relying on the note. After Nora died, her executor refused payment, arguing the note was only a gift.
Is Evan most likely to recover on the note?
Explanation. The majority held that the promise in this kind of note is still gratuitous and not supported by consideration where the promisee made no return promise and was not contractually bound to quit work. But the note is enforceable if the promisor's words or conduct intentionally influenced the promisee, acting in good faith, to change position for the worse. Here, Nora expressly told Evan he could leave work, and he did so in reliance on the note, so equitable estoppel bars the executor from pleading want of consideration.