Before Jerry and Duncan have their Big Race, Duncan tells Lois that if Jerry beats him, he’ll fly her to Hawaii for 2 weeks. Is Duncan bound by his words to Lois? Is he obligated to send her to Hawaii?
As we’ve discussed in our post on The Puffy Shirt, an oral contract is binding in New York state if the requirements of a legal contract are met.
- Offer
- Acceptance
- Consideration
- Mutual assent
- An intent to be bound
It’s quite clear that 4 of these elements are met: (1) Duncan makes an offer, (2) Lois accepts, (3) there is mutual assent in their understanding of what Duncan is offering, and (4) Duncan, despite his bravado, or perhaps because of it, intends to be bound by his offer. The problem though is that Lois does not offer any “consideration” in return to Duncan. As we explored other posts (The Puffy Shirt, The Invitations, The Soup Nazi, and The Label Maker), consideration is something of value offered to a party when entering into a contract; it is the reason they are allowing themselves to be bound by the contract in the first place. Without consideration, a party cannot be bound by a contract. Since Lois does not offer anything in return, Duncan is not bound by his offer. This type of offer is legally referred to as a gratuitous promise. While it certainly feels as if Duncan must honor his word, he is not obligated to do so. He can choose not to fly Lois to Hawaii.
Lois could still have another angle to pursue, though. The principle of Promissory Estoppel might still mean that Duncan must pay for Lois’ vacation to Hawaii for two weeks. Promissory Estoppel is an equitable doctrine that may require a party to fulfill what might otherwise be considered a gratuitous promise, if one of the parties relied on it to their detriment. A court will consider these principles:
- A clear and unambiguous promise
- A reasonable reliance on that promise
- It would be an unconscionable and unjust injury to not enforce the promise.
Here, Lois clearly believed that Duncan was going to send her to Hawaii, as she asks Jerry if he will go with her to Hawaii. Let’s say Lois went home and immediately ordered airplane tickets for the island. If Duncan later tried to argue that he didn’t actually have to fulfill his words, Lois could counter by saying she bought the tickets under the belief that he was really going to give her the vacation. Under that set of circumstances, Duncan would likely at minimum have to at least compensate Lois for the price of her ticket, since she expended money based on what he told her.
As we parse through the language of Duncan’s words, we can start to unravel some more wrinkles of what Duncan might be obligated to do under a theory of Promissory Estoppel, and what Lois might or might not actually be entitled to. For instance, Duncan says he will send Lois to Hawaii for two weeks, but he makes no mention of it being an all expense paid for vacation. So Lois is likely not entitled to have her hotel or other bills paid for. On the flip side, if Lois booked a hotel or other accommodations and activities, then her argument for Promissory Estoppel would be even stronger. While Duncan wouldn’t have to pay for those costs since he didn’t make any indication that he would, Lois’ argument that she relied on Duncan’s words would be that much more compelling if she had made such arrangements.
As a final note, Duncan only says that he will fly her – Lois – to Hawaii. He does not mention a second person. So when Lois asks Jerry if he will come with her to Hawaii, Duncan is not going to be obligated, even under a theory of Promissory Estoppel, to pay for Jerry’s ticket. If Lois did buy him a ticket, as we outlined above, it would make her Promissory Estoppel argument that much stronger since it shows she was relying on his promise. But it would not obligate Duncan to fly Jerry out to Hawaii. No, instead, Jerry will just have to put on his cape and do that on his own.
