Center for Contract and Economic Organization
Program in the Law and Economics of Capital Markets
The obligation to keep promises is a commonly acknowledged moral duty. Yet not all promises – however solemnly vowed – are enforceable at law. Why are some promises legally binding and others not? Orthodox doctrinal categories provide only modest assistance in answering this persistent question. Conventional analysis, for example, has distinguished promises made in exchange for a return promise or performance from nonreciprocal promises. Indeed, common law "bargain theory" is classically simple: bargained-for promises are presumptively enforceable; nonreciprocal promises are presumptively unenforceable. But this disarmingly simple theory has never mirrored reality. Contract law has ventured far beyond such narrow limitations, embracing reliance and unjust enrichment as additional principles of promissory obligation.
Thus, a promise may be enforceable to the extent that the promisee has incurred substantial costs, or conferred benefits, in reasonable reliance on the promise. Promissory estoppel under Section 90 of the Restatement of Contracts is the primary enforcement mechanism when action in reliance follows the promise. If the change of position by the promisee precedes the promise, its nexus with the promise is more subtle. For example, a promise is enforceable when it follows a non-donative material benefit conferred by the promisee. Unjust enrichment principles are typically invoked to enforce such "past consideration" promises. Despite this expansion of liability, "gratuitous" promises of gifts or unilateral pledges to confer benefits remain legally unenforceable.
Charles J. Goetz & Robert E. Scott,
Enforcing Promises: An Examination of the Basis of Contract,
Yale L. J.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/249