Summary of Hayes v. Plantations Steel Co.
S. Ct. Rhode Island, 1982
Past Consideration- Reliance damages
Relevant Facts: Plantations is a R Is corp engaged in the manufacture of steel reinforcing rods for use in concrete construction. Hayes was an employee of the corporation from 1947 until his retirement in 1972 at age of sixty-five. He began with Plantations as an “estimator and draftsman” and ended his career as general manager, a position of considerable responsibility. He decided to retire because he had worked continuously for fifty-one years. Approximately one week before his actual retirement Hayes spoke with Mainelli, who was then an officer and a stockholder of Plantations. Mainelli said that the company “would take care” of him. There was no mention of a sum of money or a percentage of salary that Hayes would receive. There was no formal authorization for payments.
Legal Issue(s): Whether the parties had a valid contract when the consideration was work performed by employee between er’s promise and retirement date?
Court’s Holding: No
Procedure: The Sup Ct, found that employer was obligated to employee on basis of implied-in-fact contract to pay him yearly pension of $5,000, and employer appealed. The S Ct, [assuming that employer in legal effect made promise to employee when officer said that company “would take care” of him after his retirement, employee failed to supply required consideration that would make promise binding,] Reversed and remanded.
Law or Rule(s): Contracts implied in fact require element of consideration to support them as required in express contracts; only difference between the two is manner in which parties manifest their assent. Consideration consists in some right, interest or benefit accruing to one party or some forbearance, detriment, or responsibility given, suffered, or undertaken by the other.
Court Rationale: Consideration is a test of enforceability of executory promises, and has no legal effect when rendered in past and apart from alleged exchange in the present. Even if the employer made a promise to employee that the company “would take care” of employee after his retirement, employee failed to supply required consideration that would make promise binding, where employee had announced his intent to retire well in advance of any promise by employer, his expectation of pension was not based on any statement made to him or on any contract of company officer relative to him when he announced his intention to retire, and employee’s long years of dedicated service were rendered without being induced by employer’s promise. Work employee performed between employer’s promise to “take care” of him after his retirement and date of his retirement did not constitute sufficient consideration to support promise, where employee left his employment because he no longer desired to work and was not contemplating other job offers or considering going into competition with employer.
Plaintiff’s Argument: Work employee performed was sufficient consideration to support promise of employer to take care of him when he retired.
Defendant’s Argument: (Hayes) Employee failed to supply required consideration that would make promise binding, where employee had announced his intent to retire well in advance of any promise by employer.