Harold Washington College Dilorenzo and Anderson Cases Questions

first question: In case 12-4 from Chapter 12, Dilorenzo lost. In your view, what Dilorenzo could have argued in order to enhance his chances of winning?

second question: What is a contract of adhesion, and how did the court rule on this issue in Anderson case?

CASE
12-4
Past Condition/Promissory Estoppel
DILORENZO v. VALVE AND PRIMER CORPORATION
Appellate Court of Illinois, First District, Fifth Division, 2004
807 N.E.2d 673, 283 III.Dec. 68
Reid, J.
[DiLorenzo, a forty-year employee of Valve & Primer, was also
an officer, director, and shareholder of one hundred shares of
stock. DiLorenzo claims that in 1987 Valve & Primer offered
him a ten-year stock option that would allow DiLorenzo to
purchase an additional three hundred shares at the fixed price
of $250 per share. DiLorenzo claims that in reliance on that
employment agreement, he stayed in his job for over nine addi-
tional years and did not follow up on any of several recruitment
offers from other companies. Valve & Primer claims the 1987
employment agreement between it and DiLorenzo did not con-
tain a stock purchase agreement. The only purported proof of
the agreement is an unsigned copy of board meeting minutes
of which DiLorenzo had the only copy.
In January 1996, DiLorenzo entered into a semiretirement
agreement with Valve & Primer, and he attempted to tender
his remaining one hundred shares pursuant to a stock
redemption agreement. Shortly thereafter, Valve & Primer
fired DiLorenzo. DiLorenzo argued before the trial court
that, even if the purported agreement was not found to be
valid, it should be enforced on promissory estoppel grounds.
Valve & Primer moved for summary judgment, which the
trial court granted for lack of consideration. The trial court
denied the promissory estoppel claim because of insufficient
reliance. DiLorenzo appealed.]
We begin by addressing whether there was consideration
for the stock options. “A stock option is the right to buy a
share or shares of stock at a specified price or within a speci-
fied period.” [Citation.] In order to evaluate the nature and
scope of the stock options issued to DiLorenzo, we must
of this portion of our discussion, that
assume, for purposes
DiLorenzo’s corporate minutes are valid.
“A contract, to be valid, must contain offer, acceptance, and
consideration; to be enforceable, the agreement must also be
sufficiently definite so that its terms are reasonably certain and
able to be determined.” [Citation.] “A contract is sufficiently
definite and certain to be enforceable if the court is able from
its terms and provisions to ascertain what the parties intended,
under proper rules of construction and applicable principles of
equity.” [Citation.] “A contract may be enforced even though
some contract terms may be missing or left to be agreed upon,
but if essential terms are so uncertain that there is no basis for
deciding whether the agreement has been kept or broken, there
is no contract.” [Citation.] A bonus promised to induce an em-
ployee to continue his employment is supported by adequate
consideration if the employee is not already bound by contract
to continue. [Citation.] Because we are assuming the validity of
the document issuing the stock options, we now turn to
whether the underlying option is supported by valid considera-
tion so as to make it a proper contract.
“Consideration is defined as the bargained-for exchange
of promises or performances and may consist of a promise,
an act or a forbearance.” [Citation.]
The general principles applicable to option contracts
have been long established. An option contract has
two elements, an offer to do something, or to forbear,
which does not become a contract until accepted; and
an agreement to leave the offer open for a specified
time [citation], or for a reasonable time [citation].
An option contract must be supported by sufficient
consideration; and if not, it is merely an offer which
may be withdrawn at any time prior to a tender of
compliance. [Citation.] If a consideration of “one
dollar” or some other consideration is stated but which
has, in fact, not been paid, the document is merely
an offer which may be withdrawn at any time prior to
a tender of compliance. The document will amount
only to a continuing offer which may be withdrawn by
the offer or at any time before acceptance. [Citation.]The consideration to support an option consists of ‘some
right, interest, profit or benefit accruing to one party,
or some forbearance, detriment, loss or responsibility
given, suffered or undertaken by the other’ [citation];
or otherwise stated, “Any act or promise which is of
benefit to one party or disadvantage to the other ***.”
[Citation.]
“The preexisting duty rule provides that where a party does
what it is already legally obligated to do, there is no considera-
tion because there has been no detriment.” [Citation.]
Focusing on the lack of a detriment to the employee, the
trial court found no valid consideration. Based upon our
view of the discussion in [citation], the trial court was correct
in concluding that the option contract is merely an offer
which may
be withdrawn at any time prior to a tender of
compliance. DiLorenzo could have exercised the option the
moment it was purportedly made, then immediately quit,
thereby giving nothing to the employer. Though the exercise of
the option would require the transfer of money for the stock,
the option itself carries with it no detriment to DiLorenzo.
Therefore, there was no consideration for the option.
***
We next address DiLorenzo’s claim that he is entitled to
promissory estoppel. DiLorenzo argues that the trial court
the value of the shares of stock based upon the theory of
misapplied the law in finding that there was insufficient reli-
ance to support a claim for promissory estoppel. He claims
that, once the trial court decided there was insufficient consid-
eration to support the option contract, promissory estoppel
should have been applied by the court to enforce the agree-
ment as a matter of equity. DiLorenzo argues that he detri-
mentally relied upon Valve & Primer’s promise in that he
worked at Valve & Primer for an additional period in excess
of nine years in reliance on the stock option agreement. ***
Valve & Primer responds that the trial court was correct
in finding insufficient reliance to support the promissory es-
toppel claim. Valve & Primer argues that DiLorenzo could
not satisfy the detrimental reliance prong of the promissory
estoppel elements. Though DiLorenzo claimed he did not act
upon offers of employment he claims were made by other
companies during the course of his employment with Valve
& Primer, he presented to the trial court nothing but his
own testimony in support of his claim. Valve & Primer
argues that, since DiLorenzo essentially is claiming his stock
option vested immediately, he cannot contend that he detri-
mentally relied upon the purported agreement in the corporate
minutes by turning down those other opportunities. * * * For
purposes of promissory estoppel, if DiLorenzo’s allegations are
taken as true, and the purported option vested immediately, it
required nothing of him in order to be exercised other than the
payment of $250 per share.
“Promissory estoppel arises when (1) an unambiguous
promise was made, (2) the defendant relied on the promise,
(3) the defendant’s reliance on the promise was reasonable,
and (4) the defendant suffered a detriment.” [Citation.]
Whether detrimental reliance has occurred is determined
according to the specific facts of each case. [Citation.]
While we would accept that, under certain circumstances,
it may be possible for a relinquishment of a job offer to consti-
tute consideration sufficient to support a contract, this is not
such a case. There is nothing in the language of the corporate
minutes or any other source to be found in this record to sug-
gest that Valve & Primer conditioned the alleged stock option
on DiLorenzo’s promise to remain in his employment. While
the corporate minutes say the alleged grant of the stock option
was intended to “retain and reward,” it contains no mecha-
nism making the retention mandatory. Since the corporate
minutes lack a mandatory obligation on which DiLorenzo
could have reasonably detrimentally relied, and he could have
elected to buy the shares of stock immediately, DiLorenzo’s
decision to remain on the job for the additional period of over
nine years must be viewed as a voluntary act. Under those cir-
cumstances, promissory estoppel would not apply. It was,
therefore, not an abuse of discretion to grant Valve & Primer’s
motion for summary judgment on that issue.
Affirmed.
***CASE
13-3
Exculpatory Clauses
ANDERSON v. MCOSKAR ENTERPRISES, INC.
Court of Appeals of Minnesota, 2006
712 N.W.2d 796
Shumaker, J.
Respondent McOskar Enterprises, Inc. owns and operates a
fitness and health club in Monticello known as “Curves for
the club on April 2, 2003.
Women.” [Plaintiff] Appellant Tammey J. Anderson joined
As part of the registration requirements, Anderson read
an “AGREEMENT AND RELEASE OF LIABILITY,” ini-
tialed each of the three paragraphs in the document, and
dated and signed it. The first paragraph purported to release
Curves from liability for injuries Anderson might sustain in
participating in club activities or using club equipment:
In consideration of being allowed to participate in the
activities and programs of Curves for Women and to
use its facilities, equipment and machinery in addition
to the payment of any fee or charge, I do hereby waive,
release and forever discharge Curves International
Inc., Curves for Women, and their officers, agents,
employees, representatives, executors, and all others
(Curves representatives) from
any and all responsibil-
ities or liabilities from injuries or damages arriving
[sic] out of or connected with my attendance at Curves
for Women, my participation in all activities, my use
including negligence by Curves®
of equipment or machinery, or any act or omission,
representatives.
The second paragraph provided for Anderson’s acknowl-
her agreement “to expressly assume and accept any and all
edgment that fitness activities “involve a risk of injury” and
Anderson began a workout, primarily with machines, under
the supervision of a trainer. About 15 or 20 minutes later,
risks of injury or death.” After completing the registration,
having used four or five machines, Anderson developed a
headache in the back of her head. She contends that she told
the trainer, who suggested that the problem was likely just a
previous lack of use of certain muscles and that Anderson
would be fine.
Anderson continued her workout and developed pain in
her neck, shoulder, and arm. She informed the trainer but
that session.
continued to exercise until she completed the program for
The pain persisted when Anderson returned home. She
then sought medical attention, eventually had a course of
physical therapy, and, in June 2003, underwent a cervical dis-
kectomy. She then started this lawsuit for damages, alleging
during her workout at the club.
that Curves had been negligent in its acts or omissions
Curves moved for summary judgment on the ground that
Anderson had released the club from liability for negligence.
The district court agreed and granted the motion. Anderson
challenges the court’s ruling on appeal.
***
It is settled Minnesota law that, under certain circumstan-
ces, “parties to a contract may, without violation of public
policy, protect themselves against liability resulting from
their own negligence.” [Citation.] The “public interest in
freedom of contract is preserved by recognizing [release and
exculpatory] clauses as valid.” [Citation.]
Releases of liability are not favored by the law and are
strictly construed against the benefited party. [Citation.] “If
the clause is either ambiguous in scope or purports to release
the benefited party from liability for intentional, willful or
wanton acts, it will not be enforced.” [Citation.] Further-
more, even if a release clause is unambiguous in scope and is
limited only to negligence, courts must still ascertain whetherCHAPTER 13 ILLEGAL BARGAINS
a two-prong test is applied:
its enforcement will contravene public policy. On this issue,
Before enforcing an exculpatory clause, both prongs of
the test are examined, to-wit: (1) whether there was a
disparity of bargaining power between the parties (in
terms of a compulsion to sign a contract containing an
unacceptable provision and the lack of ability to nego-
tiate elimination of the unacceptable provision)
… and
(2) the types of services being offered or provided (tak-
service).
ing into consideration whether it is a public or essential
[Citation.]
>>
The two-prong test describes what is generally known as
a “contract of adhesion, more particularly explained in
Schlobohm:
It is a contract generally not bargained for, but which
is imposed on the public for necessary service on a
“take it or leave it” basis. Even though a contract is on
a printed form and offered on a “take it or leave it”
basis, those facts alone do not cause it to be an adhe-
sion contract. There must be a showing that the parties
were greatly disparate in bargaining power, that there
was no opportunity for negotiation and that the
vices could not be obtained elsewhere.
[Citation.]
*
*** There is nothing in the Curves release that expressly
exonerates the club from liability for any intentional, willful,
or wanton act. Thus, we consider whether the release is
ambiguous in scope.
***
Anderson argues that the release is ambiguous because it
broadly exonerates Curves from liability for “any act or
omission, including negligence…
The vice of ambiguous language is that it fails precisely
and clearly to inform contracting parties of the meaning of
261
their ostensible agreement. Because ambiguous language is
susceptible of two or more reasonable meanings, each party
might carry away from the agreement a different and per-
haps contradictory understanding. In the context of a release
in connection with an athletic, health, or fitness activity, the
consumer surely is entitled to know precisely what liability is
being exonerated. A release that is so vague, general, or
broad as to fail to specifically designate the particular nature
of the liability exonerated is not enforceable. [Citation.]
*** It is clear from this release that Anderson agreed to
exonerate Curves from liability for negligence, that being
part of the express agreement that Anderson accepted and it
is solely negligence of which Curves is accused.
The unmistakable intent of the parties to the Curves
agreement is that Curves at least would not be held liable for
acts of negligence. ***
***
Even if a release is unambiguously confined to liability for
negligence, it still will be unenforceable if it contravenes pub-
lic policy. Anderson contends that the Curves contract is one
of adhesion characterized by such a disparity in bargaining
power that she was compelled to sign it without any ability
to negotiate.
Even if there was a disparity of bargaining ability here-
which has not been demonstrated-there was no showing
that the services provided by Curves are necessary and unob-
tainable elsewhere. ***
The Curves release did not contravene public policy, and
we adopt the supreme court’s conclusion in Schlobohm:
“Here there is no special legal relationship and no overriding
public interest which demand that this contract provision,
voluntarily entered into by competent parties, should be
rendered ineffectual.” [Citation.]
The district court did not err in granting respondent’s
motion for summary judgment on the ground that appellant
signed and agreed to a release of respondent’s liability for
negligence. We affirm.