Brief Fact Summary.
Blinn (Plaintiff) had been an employee of Beatrice Community Hospital and Health Center, Inc. (Defendant). Plaintiff contended that Defendant had given him an oral five year employment contract for which he had foregone another employment opportunity. When Defendant fired Plaintiff six months later, Plaintiff sued for breach of contract and promissory estoppel.
Synopsis of Rule of Law.
1) When an employer makes representations to an employee concerning future employment that are not definite enough to constitute an offer of a unilateral contract, the employee remains employed at will. 2) When a promisee can show that he reasonably and foreseeably relied on a promise, he makes a claim for promissory estoppel, even though the promise may not be sufficiently definite to constitute a contract.
Oral representations may, standing alone, constitute a promise sufficient to create contractual terms which could modify the at-will status of an employee.View Full Point of Law
Plaintiff was an employee at Defendant hospital and health center. He received an offer from another employer for a job with higher pay and a guarantee that he could keep the job until he retired. Plaintiff showed the offer to one of Defendant’s administrator and asked whether Defendant would also guarantee to employ him until retirement. The administrator said “we’ve got at least five more years of work to do.” Plaintiff then spoke to Defendant’s chairman of the board and asked him the same. The chairman said “We want you to stay” and assured Plaintiff he could stay until retirement. Plaintiff was fired six months later and sued Defendant for breach of contract, claiming that the statements made by the administrator and chairman had transformed his at-will employment to an employment contract for at least five years. Plaintiff also made a claim for promissory estoppel, alleging that the statements had caused him to turn down the other job offer. The trial court granted summary judgment to Defendant on both claims. The state intermediate appellate court reversed, finding the evidence created a genuine issue of material fact about both whether Defendant had made an employment contract offer to Plaintiff and whether Defendant’s statements formed the basis for a promissory estoppel claim. Defendant appealed.
1) When an employer makes statements to an employee concerning future employment that are not definite to constitute an offer of a unilateral contract, does the employee remain an at-will employee? 2) When a promise is not definite enough to constitute a contract offer, but the promisee reasonably and foreseeably relies on that promise, has he made out a claim for promissory estoppel?
1) Yes. When an employer makes representations to an employee concerning future employment that are not definite enough to constitute an offer of a unilateral contract, the employee remains employed at will. An employer can, in some circumstances, make oral representations that form a basis for transforming an employee’s at-will status into an employment contract. However, the employee has the burden of showing that these representations are definite enough to constitute an offer for a unilateral contract of employment. The employer must manifest a clear intent to make and be bound by such an offer so that an employee’s reliance on that promise is justified. A court examines the outward manifestations of the parties in determining whether an offer was made. In this case, Defendant’s statements to Plaintiff were not definite enough to constitute an offer of a unilateral contract. The statement “we’ve got at least five more years of work to do” is not a clear offer of definite employment and is not an objective manifestation of an intent to create a unilateral contract, even if Plaintiff subjectively believed that it was. The appellate court’s finding that a genuine issue of material fact existed as to the breach of contract claim is in error and is reversed.
2) Yes. When a promisee can show that he reasonably and foreseeably relied on a promise, he makes a claim for promissory estoppel, even though the promise may not be sufficiently definite to constitute a contract. According to state law, the promise underlying a promissory estoppel claim does not need to be as definite as a contract analysis would require. In order to put forth a promissory estoppel claim, the promisee’s reliance on a promise must only be reasonable and foreseeable. So although the statements made by Defendant’s representatives were not definite enough to create an employment contract, they may have reasonably and foreseeably induced Plaintiff to turn down the other job offer. The appellate court’s finding that a genuine issue of material fact existed as to the promissory estoppel action was correct. The dissent argues that this decision expands previous decisions that held that a promissory estoppel claim could be made when a party has detrimentally relied upon a promise of at-will employment. However, it does not because this is not a case regarding a promise of at-will employment. This case instead concerns whether Defendant is estopped from claiming that Plaintiff was an at-will employee because of the promises made to Plaintiff. Unlike the view expressed in the Restatement, this state does not require that a promise sought to be enforced through promissory estoppel meet the same definiteness requirement as a contract. Our state requires only reasonable and foreseeable reliance on a promise, even if the promisor did not intend to be bound by that promise. The dissent argues for the Restatement view, but that is not the law in this state. Here, there is evidence upon which a trier of fact could determine that Plaintiff’s reliance was reasonable and foreseeable. Affirmed as to this issue.
Dissent not included in casebook excerpt.
According to the Restatement, promissory estoppel occurs when a promise is made, but a contract is not formed because no consideration is given. Reasonable reliance by the promisee can make the promisor liable for breach of the promise. The promisee’s reasonable reliance on the promise replaces the consideration required in a contract analysis. Otherwise, the analysis is the same as for a contract.