Question

Ken, a research chemist, has been promised a fellowship with a stipend of $10,000 to do research on synthetic fuel oil. Under the terms of the fellowship, Ken is free to use the money as he sees fit. Ken decides to build his own laboratory, so he will not have to rent one. He hires a carpenter who begins working on shelving and cabinets in the laboratory. Then Ken receives a telegram saying the fellowship has been canceled. No reason is given for the cancellation. If Ken sues, will he be able to collect the money from the foundation which promised the fellowship? Explain your answer using legal analysis.

Answer 1

Ken will be able to collect the money from the foundation which promised the fellowship.

The primary basis for the enforcement of promise is consideration which is the value given in return for a promise. Consideration should be something of legally sufficient value and there must be a bargained-for-exchange to have a valid consideration. In order to satisfy the element of bargained-for-exchange, the promise must be made by the promisor in return for the promisee’s promise or performance. Ken is offered fellowship with stipend of $10,000 to do research on synthetic fuel. But under the terms of the fellowship, Ken is free to use the money as he sees fit, hence there is no definite performance for the fellowship in return. Hence there is no valid consideration here. But a promise is enforceable even if there is no consideration, based on the principle of promissory estoppel. The elements to prove promissory estoppel include a clear and definite promise made by the promisor knowing that promisee would rely on it, promisee’s reliance on the promise through some action or inaction, reliance leading to substantial detriment for the promisee and enforcement of the promise necessary to avoid injustice. Here the foundation has made a clear and definite promise to pay $10,000 as fellowship knowing that Ken would rely on it. Ken has relied on the promise and decided to build his own laboratory and hired a carpenter who begins working on shelving and cabinets in the laboratory. The reliance on the promise has resulted into detriment for Ken as he needs to pay the carpenter and related expense to build the library. The enforcement of the promise is necessary to avoid injustice here. Hence the promise is enforceable here based on promissory estoppel and Ken will be able to collect the money offered.