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Supreme Court of Rhode Island - 438 A.2d 1091
tl;dr:
An employer promised to pay a longtime employee in retirement, but reneged after the employer fell under new ownership. The promise was not enforceable because there was no consideration or reliance.Video Summary
Case Summary
In Hayes v. Plantations Steel Co. (1982), a man sued his former steel manufacturing employer for breach of contract, claiming the company had promised him a lifelong monthly pension after his retirement.
Hayes was a longtime employee of Plantations. He retired in 1972 at age 65 after 25 years of service. Prior to his final day at work, Hayes spoke with the founder of the company, Hugo Mainelli, who said that the company “would take care” of him in his retirement, but did not mention a specific arrangement. Hayes received $5,000 from Plantations each year from 1973 to 1976. The company went under new ownership in 1976 and the new leadership stopped paying Hayes.
Hayes brought suit alleging that there was either sufficient consideration or that the contract could be enforced through promissory estoppel. The trial court ruled for Hayes. Plantations appealed.
The appellate court reversed the decision, arguing that there was no implied-in-fact contract that can be determined from the parties’ conduct and the case does not meet the requirements of promissory estoppel.
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The Supreme Court of Rhode Island reversed the lower court's decision that Plantations Steel Company was obligated to pay Hayes a pension for life. The court found that there was no valid consideration for the promise made by Plantations Steel Company to pay him a pension. Hayes had already decided to retire before the promise was made, and his decision was not influenced by any statement or conduct of the company. Hayes' expectation of receiving a pension was not based on any statement made to him or on any conduct of the company officer. Therefore, the promise of a pension is not legally enforceable. The court also noted that the lower court erred in finding an implied contract obligating the company to pay a pension to Hayes for life.
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