Monday, September 3, 2007
In this second installment of our new feature, Teaching Assistants, we have a look at Mark Pettit, Jr.'s essay, Modern Unilateral Contracts, 63 B.U. L. Rev. 551 (1983). This is an especially useful piece of contracts scholarship for instructors and students who wonder why casebooks and hornbooks usually treat the distinction between unilateral and bilateral contracts as fundamental while the Restatment (Second) on Contracts (R.2d) tries to will unilateral conracts out of existence. Pettit's article provides useful insights into the development of unilateral contract doctrine. In so doing, he also provides challenging scenarios in which we can test our instincts about the most fundamental question in contracts theory -- what sorts of promises should be enforceable at law?
Although Pettit eschews provocative language, one gets the sense that this is one area where Karl Llewellyn's faith in his own ability to devise legal doctrines appropriate to the real needs of commerce was sadly misplaced. Llewellyn believed that real, unilateral contracts (as opposed to what he termed "pseudo-unilaterals") tend to involve improbable scenarios about walking across the Brooklyn Bridge or climbing greased flagpoles. Id. at 551. The R.2d's solution is to turn pseudo-unilaterals into bilateral contracts by implying a promise to perform wherever possible. Still troubled by what Llewellyn called "unjust and inequitable" results that flow from the rare, true unilateral contract, the R.2d's drafters permit acceptance of a unilateral contract through tender of part performance in s. 45. Id. at 551.
However, as Pettit explains, while Llewellyn sought to banish unilateral contracts to a "freak tent," courts continue to welcome them into the Big Top. Id. at 552. Pettit gives two reasons for this. First, while Llewellyn sought to limit unilateral contracts to situations where an offeror would not be satisfied by promissory acceptance, courts recognize the formation of a unilateral contract whenever an offeree makes no promise. Id. at 573-74. Second, modern unilateral contratcs arise in non-commercial contexts that tend to pit an individual against a large and perhaps powerful organization. Id. at 574. Thus lines of cases involving unilateral contracts ome in the empoyment context (commissions or benefits -- id. at 559-67); in cases seeking to enforce plea bargains and other contexts in which citizens attempt to hold the state to a unilateral promise (id. at 568-72); in cases in which students sue educational institutions (id. at 572-73); and even in civil rights cases. Id. at 574-75. Ironically, although Llewellyn disliked unilateral contracts as an obstacle to the enforcement of promissory obligations, they are now invoked in order to expand the scope of enforceable promises.
Pettit thus notes that while defendants used to rely on unilateral contract theory to avoid liability, in modern cases, plaintiffs rely on unilateral contracts theory in order to enforce promises in situations where plaintiffs themselves are not bound to do anything. As Pettit puts it,
the defendant's alleged promise is a promise to maintain the status quo, and the plaintiff's peformance is simply continuing the status quo.
Id. at 576. For example, an employer who offers a bonus to her sales force if they achieve certain performance targets can be held to her promise to pay that bonus if the employees achieve such targets, even if they achieve such targets by performing their ordinary duties.
Pettit notes a problem with modern unilateral contracts in the employment context. Courts have enforced promises to provide insurance or retirement benefits even when the employer went out of its way to stress that it was not guaranteeing the continuation of such benefits and when the employee did not rely on their continuation. Id. at 579-80. Such unilateral contracts, it would seem, protect neither an expectation nor a reliance interest. Pettit also notes with alarm a tendency to use the unilateral contract concept to expand liability in personal injury cases. Id. at 584-87. For example, victims of a collapse of stands at a high school football game were allowed to pursue a claim of liability against the local board of education based on unilateral contract, where an ordinary tort claim was barred under immunity doctrine. The court enforced an implied promise by the board of education that the viewing premises were reasonably safe. Id. at 584.
Finally, Pettit considers promissory estoppel as an alternative to unilateral conract theory as an avenue of recovery. Id. at 591-93. He concludes that specifying the extent of reliance is problematic in such cases. Still, in some unilateral contracts cases, awarding full expectation damages seems excessive, especially if plaintiff has neither offered new consideration in return for the unilateral promise or relied on that promise.