Promissory Estoppel and Employment Contracts: The Turnip Plaza Hotel Case

Introduction

Turnip Plaza Hotel is a highly reputable business which has shown a high level of performance in the recent past. Thanks to the work of the company's management as well as the effort made by other employees like Mark Piper. Contracts are always vital agreements which binds the operations of the parties involved in a contract. When Mark was approached by the Huron Overnight Inn Manager Mrs. Stacy Nguyen to quite his current job and consider her offer for the new job, he had the right to accept or decline the offer. However, due to the counter offer which was provided by Turnip Manager Mr. Griffin's, he decided to turn down the offer and accept the 50% salary increment and a guaranteed contract for a period of two years. However, when Mark was laid-off shortly when the company was undertaking restructuring. These thus raises an opportunity cost for Mark hence damages and could rely on the promises which was made to him by Griffins to take a legal action. It is because when promises are made, there is a high expectations that such promises will have to be performed. However, whether these rights to expect and demand performance and moral or legal rights tend to depend on whether the promise was made in the context of a valid and enforceable contract. It is only enforceable when the requirement of the contracts are satisfied or other legal remedies are available. Therefore, in the case of this report, the legal theories that Mark might use to try to legally enforce the promise given by Edward Griffins is analysed. Highlight the damages or remedies Mark would have been entitled to when he was to file a law suit and win as well as providing the ethical issues which might arise in the actions which was undertaken by the Tunip Plaza to lay off Mark. These will assist the company to reconsider Mark's case and ensure that they do not perform such actions to an employee or make empty promises at a future date.

The legal theories that Mark would have taken into consideration

In pursuit to overcome the challenge which Mark is facing, there are various legal theories which he can be taken into consideration to assist him restore his job back or get compensated for the damages which he had suffered due to the actions which was undertaken by the hotel's management. Some of these theories comprise of natural law theory, positive law theory, Maxist law theory, realist theory of law and contract theory (contract as a promise theory or promissory estoppel). However, for Mark to enforce the Edward's promise, he had to use the the contract law theory (Promisory estoppel). In accordance with this theory, a promise is enforceable by law even if it is made without a formal consideration especially when the promisor has made a promise to the promisee who then relies on it for decision making. The person tends to make a false statement to another and the other person relies on it in good faith and to his disadvantage. In such a case, the court will tend to treat the statement as a promise and in a trial, the judge will tend to preclude the maker of such statement from denying it. Since the maker of the promise is denied the right to object it, it thus qualifies to be an enforceable promise by law. For instance, given that Griffins made the promise to Mark and Mark did rely on such promises to decline Stacy's job offer which was a bit lucrative, Griffins is then reliable for the damages he has suffered when he was laid-off since the promise is considered to be valid. Since Mark was injured by the promise, he should use this principle or theory to recover the promise and seek for compensation. However, before presenting a claim for the damages, there are legally required elements which he has to fulfil. These consist of the existence of the promiser, the promisee and a detriment that the promisee have suffered a loss. Besides, there must be a proof that the promisee must have relied on the promise, which was given and in the case of breach, it has made the victim to suffer from such breach. Therefore, in this case, the above-mentioned elements are met in Mark and Griffins agreement hence Mark has a legal obligation to demand for him to be remunerated for the damages. Besides, since he can be able to provide a proof the substantial detriment in the form of economic loss, he stands a better chance to claim for the company to reconsider their move. For instance, when Mark is laid off the economic loss which he will incur is attached to the salaries which he will forgo plus the opportunity lost when he declined the offer which was given by Stacy, the manager of the rival company. These thus enables him to take a legal action to attain the remedy which is necessary for him to recover the losses which he had encountered due to such breach. He is also entitled to file a legal suit against Turnip Plaza Hotel seeking for the indemnity of the damages which he had suffered since he relied on the promise and he has to work in the hotel for a period of 2 years with a salary increase of 50% as initially stipulated by the manager if at all the hotels management team can change their mind given the current condition of the issue.

The damages or remedies which Mark is entitled for when he wins the case

Since Mark relied on the promise given by Griffins, there are various damages which he was subjected. These can be in form of reputation, time and economic loss. It thus means that Mark as the injured party has a right to damages based on his expectations and interests as measured by the loss in the value to him due to the other parties' actions by failure to constitute the contract. It can also be aligned to any loss (consequential loss, or loss caused by the breach) and any other costs or loss that has avoided by not having to perform the contract. The damages can be justified through mutual agreement between the affected parties or seeking justice through legal system (Court system).

First and foremost, Mark will incur an opportunity cost which he incurred when declining the offer which was presented by Stacey Nguyen. In the situation where the Huron Management will realize that he is laid off, he will lose his reputation in the industry and no one will be willing to hire him since they will consider him as a reject and one who does not have any ability to steer growth in the company. The rival firm will presume that the force behind the Turnip Plaza Hotel's growth relies on the hands of another one as opposes to Mark's. Therefore, these will cause him a lot of problems in finding a new job hence a long-term cost. Besides, he will suffer an economic loss since he will forego the normal salaries which he was initially earning before he was laid off plus additional 50% salary increment which was promised by Griffins for a period of 2 years. These will tend to cause frustrations in the life of Mark, a damage which must be paid for by the Turnip Plaza Hotel.

When the contracts are breached, there are various remedies which are available for the victims. In the situation where the Griffins have not fulfilled the promises which he did give Mark, Mark has the rights to seek a remedy or a combination of remedies to make the injured party as whole. Some of the remedies for the breach of the promise consist of remedies at law or for the damages and, equitable remedies. In the case of this scenario, the monetary and equitable remedies is applicable. Besides, he can seek the remedy under the theory of promissory estoppel. For instance, the company is to be paid for the economic loss which he foregone when he was laid-off, and the opportunity costs which he had foregone. Besides, he was to be paid the salary for the two years if at all he as to stop working in the company. The new salary must be above the present salary by 50%. However, the company has an option of giving back Mark his job and pay him his salary as they had promised.

The Ethical Issues

Do the Turnip have ethical obligation to fulfil the promise

In the management of the employees, ethics is very vital. It can thus be evident that when the Hotel breached the promise which they made to Mark, they have an ethical obligation to fulfil the promise which are made to him by Edward. It is because their action violates the rights of the rights, there is no justice or fairness, the actions are not fair, honest, it does not show integrity and does not show compassion. Besides, the harm which their action has caused to Mark is severe and they tend to adversely affect his career either at the current or future date. Therefore, given that they had the prior information about the decisions which are made by Mark to work in the company, they cannot run away from their enticements in form of promise which they had made to Mark. Since Mark has fully depended on the promise and declined the offer, which was given by Stacey, there is a high certainty that he is prone to damages. These thus makes the Turnip Plaza Hotel to be liable to compensate him for the damages.

Is it right to lay-off mark at this circumstance

I tend to think that it is not right for Turnip Plaza Hotel to lay-off Mark at this circumstance since he does not deserve such punishment. It is because he never demands for the salary increase for him to stay but it is Griffins who made a volunteer promise after getting the report from Marks Colleagues. Therefore, when they cannot meet their promises, they are supposed not to give the excuses for laying him off but rather negotiate the terms with him for him to even lower the salary increment rates. Besides, given that Mark had not accepted the offer of Stacey and was still putting it into consideration, they were supposed to discuss it with him before they make a blind promise which they could not promptly promise. Also, maybe he was not for leaving the company to the rival firm, so laying off is unethical since it is a mechanism of destroying the image of the employees as oppose to building their career. Therefore, the Turnip Plaza Hotel's management should reverse their move and give back Mark his job.

What Turnip Plaza Should do from an Ethical perspective

From an ethical perspective, the hotel should give back Mark his job and pay him for the salaries accrued since he was laid off. Besides, they should apologize in writing to Mark for the step which they have made and fulfil the promises as it was made by Griffins. That is, they should increase his salaries by 50% and extend his term of contract by 2 years as it was first promised. However, when they cannot meet such conditions, they should negotiate a review of the terms with Mark to settle on the new terms which they can easily meet without strain. These will prevent them from incurring the legal costs as well as the payment which they will make to Mark for the damages which they have caused to him during the period. These will enhance peaceful coexistence between the management and the team of employees since their actions today will be used as a precedent in future.

Conclusion

From the analysis, it can be evident that the Tulip Company have breached the terms of the contract and they should be held liable for the damages which Mark will be subjected to either in the short or long run. These is based on the promissory estoppel theory. They should pay the remedies or give back Mark is to avoid the legal consequences.

References

Pound, R. (1959). Jurisprudence (Vol. 3). Saint Paul, MN: West Publishing Co.

Harrison, J. L., & Theeuwes, J. (2008). Law and economics. New York: W.W. Norton & Co.

Koffman, L., & Macdonald, E. (2010). The law of contract. New York: Oxford University Press.

McKendrick, E. (2017). Contract Law.

O'Sullivan, J., & Hilliard, J. (2012). The law of contract. Oxford: Oxford University Press.

Peel, E., & Treitel, G. H. (2011). The law of contract. London: Sweet & Maxwell.

Promises in contracts? - InBrief.co.uk. (n.d.). Retrieved from https://www.inbrief.co.uk/contract-law/promise-to-create-contract/

Ruff, A. (2014). Contract law. London: Sweet & Maxwell.