10. If the spendthrift sues his uncle for $5,000 after the latter learned of the car-purchase contract and then repudiated his promise, which of the following is the uncle's best defense?

A notorious spendthrift, who was usually broke for that reason, received the following letter from his uncle, a wealthy and prudent man: «I understand you're in financial difficulties again. I promise to give you $5,000 on your birthday next month, but you'd better use it wisely or you'll never get another dime from me.» The spendthrift thereupon signed a contract with a car dealer to purchase a $40,000 automobile and to make a $5,000 down payment on the day after his birthday.

A promise to make a gift in the future is not enforceable
Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless the value of the promised gift is substantially equivalent to the promisee's loss by reliance
Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless that reliance also results in an economic benefit to the promisor
Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless injustice can be avoided only by such enforcement

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The consideration doctrine is designed to enforce promises that are «bargained for.» There are some promises which, although the promisor makes them without bargaining for anything in return, nonetheless induce the promisee to rely upon them to his legal detriment. This situation is known as promissory estoppel, which arises when a promise is made that the promisor should reasonably expect to induce action or forbearance on the part of the promisee. When the promisee then relies on such a promise, a court may bind the promisor to the promise he made if injustice can only be avoided by the enforcement of the promise. The promissory estoppel doctrine requires actual reliance on the promise, and the reliance must have been foreseeable.

D is correct. Under the theory of detrimental reliance, a gratuitous promise may be enforceable notwithstanding lack of consideration if the party making the promise has reason to expect the promise will induce reliance on the part of the promisee, there has been reliance in fact, and injustice may only be avoided by enforcement of the promise. The uncle should have foreseen that his promise would induce action on the spendthrift's part, which the promise did. However, the nature of the spendthrift's reliance (buying a car that he could not afford) is inconsistent with the intended purpose of the uncle's gift, which suggests that justice does not require enforcement of the promise.

A is incorrect. There are some promises which, although the promisor makes them without bargaining for anything in return, nonetheless induce the promisee to rely to his legal detriment. Some gift promises are enforceable under a reliance theory.

B is incorrect. This is not the correct way to measure whether a promisee reasonably relied on the gratuitous promise made by a promisor. Reliance does not require equivalence between the value of the promise and the extent of the reliance.

C is incorrect. The essential tenet behind promissory estoppel is that it is not a bargained-for exchange, meaning the promisor is not suffering any legal detriment by making the gratuitous promise. Reliance does not require the reliance to confer a benefit on the promisor.

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10. If the spendthrift sues his uncle for $5,000 after the latter learned of the car-purchase contract and then repudiated his promise, which of the following is the uncle's best defense?

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