Citation. 22 Ill.318 Pa. 490, 178 A. 490 (1935)
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The Plaintiff, Langer (Plaintiff), retired from the Defendant, Superior Steel Corp. (Defendant) and received a letter stating he would receive a pension of $100 per month for life. After 4 years of payment the company ceased payment.
Synopsis of Rule of Law.
For a gratuitous promise to be enforceable, there must be valid consideration resulting from a bargained for exchange.
Facts.
Plaintiff brought an action for assumpsit, to recover damages arising from a letter from Defendant stating that the Plaintiff would receive $100 per month for life or until he began to work for any competitor. Plaintiff adhered to the terms of the letter, but the company ceased payment after 4 years. The trial court held for the Defendant.
Issue.
Was the letter a gratuitous promise or an enforceable contract?
Held.
The letter is an enforceable contract because it was a result of a bargained for exchange. Consideration was present by the Plaintiff refraining from working for a competitor in exchange for the payment of $100 per month. Likewise, the company received a benefit by barring its former skilled employee to work for its competition. This differs from Kirksey v.Kirksey because there was benefit derived by the promisor.
The contract is also enforceable on a theory of promissory estoppel. Here, the promisor should reasonably expect the promise to “induce action or forbearance of a definite and substantial character.”
Discussion.
The court looks at both parties to the transaction and finds that both parties gained a benefit in entering the contract. Therefore, the existence of a bargained for exchange makes this agreement enforceable rather that gratuitous.
