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Recipe

Contracts - Cumulative

Author: Michael Conklin, Powell Endowed Professor of Business Law, Angelo State
University

Title: Is Michael Scott’s Promise a Contract?

Subject: Contracts- Cumulative (formation, consideration, promissory estoppel, capacity,
Statute of Frauds, and third parties).

Activity overview: This activity involves playing a clip from The Office and discussing whether
a contract was formed.

Ingredients: Just the ability to play a video clip to the class

Running the activity: Play the first 1:08 of the following video:
https://www.youtube.com/watch?v=x0N2ZxQJYTw.

This is from season 6 episode 12 of NBC’s The Office. Then ask your class “Disregarding the issue of Michael Scott’s financial ability to satisfy any obligations, did his promise create an enforceable contract?”

Issues to discuss include:

Does the fact that the students were minors when the promise was made mean that Scott can void the contract? (No, their lack of capacity would make the contract voidable but only at the students’ discretion, which they would not choose to do. Furthermore, the students who already turned 18 during their senior year would have “affirmed” the contract as adults.)

Was Scott’s offer reasonably definite? What exactly is required to pay someone’s “college tuition”? (While there would be some uncertainty involved—does this include out-of-state tuition? Private college tuition? Trade school tuition? Law school tuition?—modern courts are likely to find this is reasonably definite and simply provide missing terms to answer these questions.)

Since graduating from high school is a good idea anyway, does it therefore not count as consideration? (There is no requirement that consideration be detrimental. Consideration could come in the form of agreeing to watch your favorite movie, quitting smoking, or getting paid $100 for something you would have done for free. What matters is that the students were not legally obligated to graduate high school. Therefore, doing so counts as consideration.)

If it could be proven that Scott never intended to pay, would that be relevant? (No, it is the offerees’ (students’) perception that is used to determine this. If the students were reasonable in concluding that Scott was serious, that’s enough regardless of whether Scott was serious or not. The fact that Scott’s promise was covered in the media, that he continued to communicate with the students, the local newspaper coverage, and that the school supported this arrangement is strong evidence that it was reasonable for the students to think Scott’s offer was serious.)

Since this involves a unilateral contract and not a bilateral contract, could Scott simply revoke his offer right before the students graduate? (It is generally true that acceptance of a unilateral contract is not effective until performance is tendered. However, the students are about to graduate and therefore Scott will not be able to revoke his offer based on “substantial performance.” Here, it is interesting to ask the class at what point in these students’ education Scott would have lost his ability to revoke his offer. You will get wildly different estimates which illustrates why you should define all relevant terms in contracts, otherwise a judge who may think very differently than you will define missing terms in a way you might not like!)

This contract is impossible to complete in one year, so under the statute of frauds it would have to be in writing. Since there’s no formally signed contract, does Scott get off “Scott free”? (This is correct about the statute of frauds. However, there are other ways to satisfy the statute of frauds other than an officially signed contract. For example, emails can satisfy the statute of frauds. The video tapes of him admitting he made the promise could count as an “electronic record” which would satisfy the statute of frauds in some jurisdictions. And the letters he sent to the students, if signed, could also count. Here, it is important to note that many states do not have the one-year provision as part of their statute of frauds.)

Could the parents of the students sue to enforce the contract against Scott as third-party beneficiaries? (No, because they are incidental, not intended beneficiaries. While Scott likely knew that the parents would benefit from his promise, that is not enough. He must have also made the promise with the intent of helping the parents, which it appears he did not.)If this were not held to be a contract, is there any theory that would allow the students to enforce the promise anyway? (Yes, promissory estoppel / detrimental reliance. For example, the students could perhaps show that, in reliance on Scott’s promise, they did not save money for college or apply for a scholarship.)

Assuming that the writing requirement of the statute of frauds is satisfied, it appears an enforceable contract exists. As anyone who has watched The Office knows, Scott does not have the money to fulfill this contractual obligation. This illustrates one final, important point. Winning in court and collecting on that judgement are not synonymous. Winning in court simply gets the plaintiff a piece of paper stating the defendant owes them money. If a defendant is unable to pay, then that entire process was largely futile.

Substitutions: You can play the entire eight-minute clip, but the first 1:08 is all the information the class will need to participate.

Suggestions: This is a great cumulative contracts exercise since it involves so many elements of contract formation. For this same reason it would also make a great contracts exam review.

Review or follow-up: This activity is best implemented after covering contracts. If a cumulative final is utilized, the results of this exercise can be reviewed.