John Ricketts gave his granddaughter, Katie Scothorn, a promissory note for $2,000 so she would not need to work. Relying on the note and her grandfather’s expressed wish, Scothorn quit her job. Ricketts paid interest on the note during his life, but after his death the executor of his estate refused to pay the balance. The executor argued the note was merely a gratuitous promise unsupported by consideration.
Can a gratuitous promise be enforced when the promisee reasonably relies on it to her detriment, even though traditional consideration is lacking?
A promise that induces action or forbearance of a definite and substantial character by the promisee may be enforceable if injustice can be avoided only by enforcement. Equitable estoppel may prevent the promisor or his estate from asserting lack of consideration where the promise was intended to and did induce such reliance.
Yes. The note was enforceable because Scothorn changed her position in reliance on her grandfather’s promise, and the estate was estopped from asserting want of consideration.
The court acknowledged that the note was a gift promise and not supported by bargained-for consideration in the conventional sense. But Ricketts intended that his granddaughter rely on the promise by giving up employment, and she in fact did so. Because her forbearance was induced by the promise and represented a substantial change of position, it would be inequitable to allow the estate to avoid payment. The court therefore applied estoppel to enforce the promise despite the absence of consideration.
Ricketts is a foundational early American promissory-estoppel case and is frequently cited for the proposition that reliance can substitute for consideration in appropriate cases. It anticipated the modern reliance principle later reflected in Restatement (First) of Contracts § 90. It is closely related to Allegheny College v. National Chautauqua County Bank of Jamestown, 246 N.Y. 369, 159 N.E. 173 (1927), and Feinberg v. Pfeiffer Co., 322 S.W.2d 163 (Mo. Ct. App. 1959), which also address enforcement of promises based on reliance.
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