Brief Fact Summary. P brings a breach of contract action against D because D refuses to honor a pension plan agreement.
Synopsis of Rule of Law. Mutuality of obligation requires that consideration for a promise be bargained for and given in exchange for that promise.
The three elements of promissory estoppel are a promise which: (1) the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person; (2) does induce action or forbearance; and, (3) is held binding because injustice can be avoided only by enforcement of the promise.View Full Point of Law
Issue. After being notified of her right to a pension plan, does P’s continuation to work for D constitute a valid consideration?
Held. No. But judgment affirmed for other reasons. See the second part of the opinion at p. 91, Farnsworth Cases and Materials, 6th Edition.
• P’s continuation to work after being notified of the pension plan lacks the mutuality of obligation, which is essential to the validity of a contract. There was no language predicating P’s right to a pension plan upon her continued employment. P made no promise or agreement to continue her employment with D in exchange for D’s promise to pay P her pension plan.
Discussion. For a consideration to be valid, it must be bargained for and given in exchange for a promise.