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Hayes v. Plantations Steel Co.

    Brief Fact Summary.

    Plaintiff sued Defendant, arguing that his decision to retire constituted consideration for Defendant’s promise to pay him a pension, or in the alternative that he was entitled to the pension under the theory of promissory estoppel. The trial court ruled in favor of Plaintiff. Defendant appealed.

    Synopsis of Rule of Law.

    Under the doctrine of promissory estoppel, the acts of reliance by the promisee to his detriment provide a substitute for consideration.

    Facts.

    Edward Hayes (Plaintiff) worked for Plantations Steel Co. (Defendant) for 25 years. In 1972 he decided to retire at age 65. Upon his retirement announcement, Plaintiff met with Hugo Mainelli, an officer of Defendant. Mainelli told Plaintiff that Defendant “would take care” of him, but they did not sign a formal pension agreement, nor did Mainelli mention any dollar amount. Each year from 1973 to 1976, Defendant paid Plaintiff $5000 “as a token of appreciation for the many years of [his] service.” It was implied that the payments would continue annually and Plaintiff did not look for other employment after his retirement. In 1976, the Mainelli family ceded control of Defendant and the new ownership ceased payments to Plaintiff. Plaintiff brought suit against Defendant, arguing that his decision to retire constituted consideration for Plantation’s promise to pay him a pension, or in the alternative that he was entitled to the pension under the theory of promissory estoppel. The trial court ruled in favor of Plaintiff. Defendant appealed.

    Issue.

    Whether a promise can be enforced under the doctrine of promissory estoppel if the act by the promisee to his detriment was not done in reliance on the promise.

    Held.

    No. The trial court’s ruling is reversed. Under the doctrine of promissory estoppel, the acts of reliance by the promisee to his detriment provide a substitute for consideration.

    Discussion.

    Under the doctrine of promissory estoppel, the acts of reliance by the promisee to his detriment provide a substitute for consideration. However, a promise cannot be enforced if the act by the promisee to his detriment was not done in reliance on the promise. Similarly, past consideration given before and without reference to a promise is distinct from any alleged bargained-for exchange, and thus is not sufficient to support a contract. In the present case, the trial court must be reversed on both consideration and promissory estoppel grounds for essentially the same reasons. Mainelli’s promise to pay Plaintiff a pension was not supported by valid consideration. Plaintiff had already decided to retire when Mainelli promised to pay him a pension. Plaintiff’s claimed consideration is thus past consideration and not sufficient to support a contract. Similarly, Plaintiff may not use promissory estoppel to enforce the promise. Plaintiff’s decision to retire was not made at the request of Defendant, nor was it in reliance on Mainelli’s promise. Plaintiff made the decision of his own accord and so cannot now claim that the promise induced his retirement. Similarly it cannot be said that Plaintiff’s decision not to look for another job was in reliance on Mainelli’s promise because it was clear from his announcement and actions that Plaintiff was ready to retire—he was 65 years old—regardless of the promise.


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