Contracts I, Pages 164–169

Hayes v. Plantations Steel Co.

Supreme Court of Rhode Island, 1982

Facts:

Plaintiff was an employee of defendant for twenty-five years, until he retired in 1972 at the age of sixty-five. For three years after his retirement, plaintiff received an annual sum of $5,000 from defendant. Plaintiff announced his intention to retire, but testified that he would not have done so without the pension. Plaintiff did not seek another job after retiring. A week before his retirement, plaintiff spoke with an officer, who said that the company "would take care" of him. This was the only conversation concerning a pension however, and the officer was not authorized to give pensions. There was no corporate policy for pensions except for union members, which plaintiff was not. The first payment was made as a token of appreciation. It was implied that it would continue on an annual basis and Mainelli intended to send them as long as he was around. Plaintiff would visit and thank defendant and ask how long they would continue, so he could plan. In 1976, a takeover and poor business caused the payments to stop.

Procedural History:

Trial justice found that defendant was obligated to Hayes on the basis of an implied-in-fact contract to pay him a yearly pension of $5,000. He also found that that plaintiff had made a sufficient showing of detrimental reliance upon defendant's promise to pay to give rise to its obligation based on the theory of promissory estoppel.

Issue:

Is a promise to pay a pension after one announced he was retiring binding?

Rule:

Promissory estoppel requires a promise that one relies on.

Reasoning:

Plaintiff announced his retirement before he was promised to be taken care of an therefore could not have premised his retirement on this.

Holding:

No, a promise must influence one beforehand to be binding. Reversed.

Dropbox – Your stuff, anywhere – Try it free