Wednesday, December 4, 2013

Spooner v. Reserve Life Insurance Co. case brief

Spooner v. Reserve Life Insurance Co. case brief summary
287 P.2d 735 (1955)


CASE SYNOPSIS
Defendant, an insurance company, appealed a judgment from the Superior Court for King County (Washington) in favor of plaintiffs, agents employed by defendant, in an action for breach of contract involving performance bonuses.

CASE FACTS
Defendant distributed a bulletin outlining a bonus program subject to certain conditions and a provision that defendant could withhold any bonuses with or without notice.

DISCUSSION

  • The court reversed the judgment in favor of plaintiffs in an action for breach of contract involving performance bonuses. 
  • The court held that the bulletin did not create an enforceable contract for the payment of bonuses because the limitation in the bulletin created an illusory promise, which created no binding obligation on defendant to pay bonuses. 
  • The promise to pay bonuses was illusory because the limitation regarding withholding bonuses made performance of the promise optional or discretionary on the part of defendant. 
  • The court therefore reversed with instructions to enter a judgment dismissing the case.

CONCLUSION
The court reversed because a promise by defendant to pay its agents performance bonuses was subject to a limitation that reserved the right to withhold the bonuses, making the promise illusory and creating no enforceable contract or obligation for the payment of bonuses.

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