A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.
Defendant company promised to pay plaintiff employee $ 100 per month for the rest of his life after his retirement if he agreed to not work in any competitive occupation. After four years, defendant company stopped paying plaintiff employee the monthly payment. Plaintiff employee sued for breach of contract. The trial court ruled in favor of the company and the employee appealed.
Is an agreement between an employer and an employee, under which the employee would retire and refrain from any competitive activity supported by consideration and therefore enforceable?
The court reversed, holding that there was good consideration to form a contract between the parties in that plaintiff employee refrained from seeking other employment with any competitive company. By accepting the monthly payment, plaintiff employee accepted the conditions imposed by defendant company and thus was restrained from doing something he had a right to do. This was sufficient consideration to support the contract.