E-mail:
Jack Balkin: jackbalkin at yahoo.com
Bruce Ackerman bruce.ackerman at yale.edu
Ian Ayres ian.ayres at yale.edu
Corey Brettschneider corey_brettschneider at brown.edu
Mary Dudziak mary.l.dudziak at emory.edu
Joey Fishkin joey.fishkin at gmail.com
Heather Gerken heather.gerken at yale.edu
Abbe Gluck abbe.gluck at yale.edu
Mark Graber mgraber at law.umaryland.edu
Stephen Griffin sgriffin at tulane.edu
Jonathan Hafetz jonathan.hafetz at shu.edu
Jeremy Kessler jkessler at law.columbia.edu
Andrew Koppelman akoppelman at law.northwestern.edu
Marty Lederman msl46 at law.georgetown.edu
Sanford Levinson slevinson at law.utexas.edu
David Luban david.luban at gmail.com
Gerard Magliocca gmaglioc at iupui.edu
Jason Mazzone mazzonej at illinois.edu
Linda McClain lmcclain at bu.edu
John Mikhail mikhail at law.georgetown.edu
Frank Pasquale pasquale.frank at gmail.com
Nate Persily npersily at gmail.com
Michael Stokes Paulsen michaelstokespaulsen at gmail.com
Deborah Pearlstein dpearlst at yu.edu
Rick Pildes rick.pildes at nyu.edu
David Pozen dpozen at law.columbia.edu
Richard Primus raprimus at umich.edu
K. Sabeel Rahmansabeel.rahman at brooklaw.edu
Alice Ristroph alice.ristroph at shu.edu
Neil Siegel siegel at law.duke.edu
David Super david.super at law.georgetown.edu
Brian Tamanaha btamanaha at wulaw.wustl.edu
Nelson Tebbe nelson.tebbe at brooklaw.edu
Mark Tushnet mtushnet at law.harvard.edu
Adam Winkler winkler at ucla.edu
What parent hasn’t heard a child say with no small degree of indignation, "You lied to me; you said you would (take me to the park, buy me an ice cream cone…)." You want to respond, "No. Lying and promise-breaking are two different things. I might be a scoundrel for breaking my promise, but I never lied to you. I just changed my mind."
But there is still a way that the child's intuition can be right. A promise can be a lie if the promissor never intended to perform in the first place.
The law has long recognized this possibility and reacted harshly to insincere promisors. If you breach because you never intended to perform, you can be liable for punitive damages under the doctrine of promissory fraud (and can even be criminally prosecuted for false promise).
Because of the prospect of punitive damages, it shouldn't surprise us that promissory fraud is frequently claimed. In many jurisdictions, promissory fraud is litigated more than mistake and impossibility combined. But it is almost never taught in law schools.
It is a complete guide to the law of promissory fraud. Here are four take-home lessons:
1. The Restatement of Torts says that every promise implicitly represents an intention to perform. But courts should acknowledge that not all promises include that representation, and they should allow promisors to disclaim it. Thus a business traveler who pays a non-refundable deposit to stay at the Holiday Inn can go ahead and immediately try for a reservation at the Ritz. Similarly, sophisticated parties drafting complex contracts should consider disclaiming representations of intent to perform, thereby minimizing promissory fraud liability.
2. Even promisors who don’t represent an intention to perform still must not intend not to perform. It would be promissory fraud (even with a non-refundable deposit) to book a reservation at the Holiday Inn that you know you are not going to use. And a party who disclaims a representation of an intent to perform should still be liable for promissory fraud if, when it entered into the contract, it affirmatively intended to breach.
3. Promissory fraud liability may not be appropriate when the promisor didn’t realize what she was promising. Any defendant who is mistaken about the scope of her promise – and testifies that she never intended to do X because she thought she had promised to do Y – currently runs the risk of beheld liable for promissory fraud. Every failed "mere puff" defense raises the risk of promissory fraud liability. Courts and litigators need to pay more attention to scienter.
4. Promissory fraud is usually inappropriate when a promisor breaches because of changed circumstances. But in some contexts, a defendant promisor makes an implicit representation of an intent not to breach even if a better offer comes along. Thus a landlord who rents to you and then immediately solicits tenants at a higher price is asking for trouble.
The act of promising often represents multiple facts about the world -- not just that the promissor intend to perform, but that it is probable that she will perform, and even that she will not change her mind for frivolous reasons. But promissors sometimes represent much less than this. Courts and litigators have been too wooden in their single minded notion of what promissory fraud is and is not. But a more nuanced approach which expands liability in some areas and contracts liability in others -- and which gives promissors more control over the extent of liability -- would better match modern contracting behavior and the needs of society.
Promissory fraud also provides a new way to view old common law chestnuts -- like Peeveyhouse, Carbolic Smoke Ball, and Red Owl. President Bush said "Read my lips', when he probably knew he might have to raise taxes. Justice Scalia promised Delta Airlines to take a return trip when he never intended to. Once you look, promissory fraud abounds not just in art and politics but in the world all around us.
Why is putting a deposit on a hotel room a promise? It seems to me more accurate to characterize it as purchasing an option. In the alternative, if the hotel wants to require that I pre-pay in full, or promise to pay even if I don't use the room, it is free to do so.
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