a. What are the arguments that the company’s promise to pay Feinberg $2,000 per month for life is enforceable?

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a. What are the arguments that the company’s promise to pay Feinberg $2,000 per month for life is enforceable?

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Anna Feinberg began working for the Pfeiffer Company in 1969 at age seventeen. By 2007, she had attained the position of bookkeeper, office manager, and assistant treasurer. In appreciation for her skill, dedication, and long years of service, the Pfeiffer board of directors resolved to increase Feinberg’s monthly salary to $4,000 and to create for her a retirement plan. The plan allowed that Feinberg would be given the privilege of retiring from active duty at any time she chose and that she would receive retirement pay of $2,000 per month for life, although the Board expressed the hope that Feinberg would continue to serve the company for many years. Feinberg, however, chose to retire two years later. The Pfeiffer Company paid Feinberg her retirement pay until 2016. The company thereafter discontinued payments.
 
a. What are the arguments that the company’s promise to pay Feinberg $2,000 per month for life is enforceable?

b. What are the arguments that the company’s promise is not enforceable?

c. What is the proper outcome? Explain.

Answer & Explanation (1)

a. What are the arguments that the company's promise to pay Feinberg $2,000 per month for life is enforceable?

Explanation

According to the principle of promissory estoppel, even when there is no consideration in the agreement, the promisor has to fulfill the promise to recuperate the promise. Individual A has retired from the job, foregoing the salary paid by Company P and relying on the retirement benefits. Promissory estoppel is allowed as the only means of doing justice to Individual A, so that Individual A is reimbursed of the economic loss faced by them.

Sample Response

Individual A has retired from Company P and relies on the retirement benefits. Individual A is 64 years of age; it is difficult to find employment at this age. This proves Individual A's detrimental dependence on the promise made by Company P regarding retirement benefits. Individual A faces economic loss when the promise is not fulfilled by Company P.

 
 
 

b. What are the arguments that the company’s promise is not enforceable?

Explanation

Past consideration is not adequate to upkeep a promise. Individual A had also discussed that they were going to work for few more years with the company but retired just after the announcement of the retirement benefits. So, Company P is not bound to fulfill the promise.

Sample Response

The reasons that Company P can give are as follows:

Company P has promised to make the payment but the promise has not given in writing and that does not constitute a valid agreement.
Consideration was not provided by Individual A for the promise made by Company P.
Consideration cannot be calculated on the basis of the past service performed by Individual A.
Promise of gift is not necessary to be accomplished without legal consideration.

 
 

c. What is the proper outcome? Explain.

Explanation

Evidences supporting the arguments are as follows:

Company P has provided Individual A the benefits of employment during the service period. It is not necessary for Company P to keep up the promise for past consideration, which was made at the time of employment. As the promise is also made verbally, it is not enforceable by law.
Based on moral obligation and promissory estoppel, the judgement has to be in favor of Individual A. Individual A has left the job by depending on the retirement benefits that are to be received for the rest of Individual A's life.

Sample Response

The probable solutions for the case can be as follows:

Judgement in favor of Company P.
Judgement in favor of Individual A.

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