Foreseeability and Reasonableness in Promissory Estoppel
Abstract
The law of promissory estoppel contains a little-noticed puzzle relating to the way in which the justifiability of the plaintiff’s reliance is determined in American courts. Many jurisdictions now require the plaintiff asserting a promissory estoppel claim to prove that their reliance on the defendant’s promise was both reasonable and foreseeable. However, there does not appear to be even a single published case in which the court concluded that the plaintiff’s reliance satisfied one of those requirements but not the other. If, as some commentators have suggested, the reasonableness and foreseeability requirements are more-or-less equivalent, it is somewhat puzzling that American courts continue to state and apply the requirements separately. More generally, promissory estoppel’s justifiability requirement has received scant attention in the literature. There has been little discussion of the rationales for the reasonableness and foreseeability requirements, of the relationship between them, or
of whether it makes sense for courts to impose both as opposed to just one or
the other.
This article attempts to fill these gaps. It shows that the reasonableness and foreseeability inquiries, though often yielding the same result, are not equivalent. They can point in different directions in certain circumstances. Moreover, they have very different rationales. To analogize to tort, the foreseeability requirement fulfills the function of the proximate cause requirement, while the reasonableness requirement does the work of the contributory negligence and comparative fault doctrines. Based on these points, I argue that courts are right to inquire separately into whether each requirement is satisfied but should be mindful of how the requirements are interrelated and of the standard types of cases in which they can come apart. I further argue that, while foreseeable reliance should be a necessary condition of promissory estoppel liability, it is not clear that reasonable reliance should be required in all cases. Just as the law of negligence permits recovery in certain circumstances where the defendant should have foreseen unreasonably risky conduct by the plaintiff, the law of promissory estoppel should permit recovery in certain types of cases in which the promisor intended, foresaw, or should have foreseen unreasonable reliance by the promisee.
I note that this article seems relevant to the promissory estoppel analysis in this post from last week.
Abstract
Courts and commentators often treat antidiscrimination principles as alien to contract law and expressed exclusively by civil rights statutes. This Article argues that the separation is mistaken on contract law’s own terms: a wrongfully discriminatory exercise of contractual discretion is presumptively a violation of the duty of good faith and fair dealing, a mandatory contractual obligation inherent in almost all contracts.
The argument holds under both theories that dominate U.S. good-faith doctrine. Under Robert Summers’s excluder theory, discriminatory performances violate the community standards of decency, fairness, and reasonableness that orient the doctrine. Under Steven Burton’s recapture theory, a party that reduces the value of a contract for the other party for invidiously discriminatory reasons ordinarily recaptures an opportunity that the parties could not reasonably have expected to remain available after formation. Because the bad faith nature of discriminatory performance follows from the leading accounts of existing doctrine, this Article’s conclusions do not require reforming doctrine or adopting a revisionist theory of contractual equality.
This Article’s analysis has broader payoffs. It offers courts an analytical framework for navigating statutory pre-emption and distinguishing easy from hard cases, and cautions legislatures against foreclosing common-law development of antidiscrimination norms. Theoretically, the argument bears on the debate between what the Article calls “separationists,” who cabin antidiscrimination values to civil rights statutes, and “integrationists,” who see such values as pervading private law. By showing that a cornerstone doctrine of contract law yields antidiscrimination content, the Article lends support to relational justice and other pluralist accounts of private law over narrower alternatives, while suggesting that separationism’s grip on other areas of the law of the market deserves similar scrutiny.
Betting on Tomorrow: Prediction Markets and the Tax Treatment of Event Contracts
Abstract
Prediction markets purport to reveal the future. Yet they also present a more immediate legal question: when an individual purchases a contract paying one dollar if a candidate wins an election, is that individual investing or wagering? The distinction matters because federal income tax law treats investment and gambling quite differently.
Event-contract markets permit participants to wager on elections, inflation reports, public-health developments, and numerous other contingencies. Artificial intelligence and frictionless platform design can personalize wagering opportunities, accelerate trading, and cause bets to resemble conventional investments. Although many event contracts resemble recreational wagering in their design, participation, and expected returns, their regulation under financial-market statutes confers an investment-like identity. Tax law may therefore impose different consequences on economically equivalent wagers merely because one occurs through a sportsbook and another through a regulated exchange.
This Article examines that incongruity. It considers whether event contracts should qualify as capital assets or instead fall within the tax rules applicable to gambling. Drawing upon economic-substance principles and theories of tax equity, the Article argues that most retail event-contract activity is better understood as consumption-oriented wagering than as profit-motivated investment. Capital treatment, it demonstrates, elevates form over substance, undermines horizontal equity, and permits platforms and participants to exploit regulatory classifications for tax advantage.
The Article then proposes a practical framework for harmonizing the taxation of event contracts with existing gambling rules while preserving investment treatment for bona fide commercial hedging. More broadly, it demonstrates how tax law should respond when technological innovation erodes established boundaries among finance, entertainment, and wagering.
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