The Material Benefit Rule

5. The Material Benefit Rule

Another alternative basis for enforcement of promises in the absence of consideration is the so-called material benefit rule. In a mere handful of cases, courts have chosen to enforce promises made in recognition of prior benefits received. The Restatement (Second) expresses this doctrinal principle in the following terms:

§ 86. Promise for Benefit Received

(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.

(2) A promise is not binding under Subsection (1)

(a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or

(b) to the extent that its value is disproportionate to the benefit.

Both before and after the adoption of this Restatement (Second) section in 1981, courts have used the material benefit rule sparingly. In Webb v. McGowin, 168 So. 196 (Ala. App. 1935), for example, a mill worker throwing chunks of wood from the second floor of a mill held onto one heavy block as it fell in order to prevent it from landing on his boss. The worker sustained serious injuries and the mill owner promised to give him a small pension for life. When the owner died eight years later, his estate refused to continue the payments, and the court held that this promise for prior benefits should be enforced. However, courts quite frequently decline to invoke the doctrine to enforce promises recognizing past benefits.

In the following excerpt, Professor Grant Gilmore offers a characteristically witty account of the halting development of the case law.

The hesitant and cautious text of the new section no doubt reflects the uncertainties of the Reporter and his advisers… . [W]hat Subsection (1) giveth, Subsection (2) largely taketh away: the promise … will be “binding” only within narrow limits. Furthermore, the use which is made in the Commentary of two of our best known Good Samaritan cases contributes a perhaps desirable confusion:

A gives emergency care to B’s adult son while the son is sick and without funds far from home. B subsequently promises to reimburse A for his expenses. The promise is not binding under this section. [Illustration 1, based on Mills v. Wyman, 20 Mass. 207 (1825).]

A saves B’s life in an emergency and is totally and permanently disabled in so doing. One month later B promises to pay A $15 every two weeks for the rest of A’s life, and B makes the payments for eight years until he dies. The promise is binding. [Illustration 7, based on Webb v. McGowin].

The idea that §[86] has succeeded in “codifying” both the nineteenth century Massachusetts case and the twentieth century Alabama case is already sufficiently surprising but we are not yet finished.

A finds B’s escaped bull and feeds and cares for it. B’s subsequent promise to pay reasonable compensation to A is binding. [Illustration 6, based on Boothe v. Fitzpatrick, 36 Vt. 681 (1864).]

Are we to believe that my promise to pay the stranger who takes care of my bull is binding but that my promise to pay the stranger who takes care of my dying son is not? Or that “adult sons” are supposed to be able to take care of themselves while “escaped bulls” are not? Or that, as in maritime salvage law, saving property is to be rewarded but saving life is not?

Enough has been said to make the point that Restatement (Second), at least in §[86], is characterized by the same “schizophrenic quality” for which Restatement (First) was so notable. This may well be all to the good. A wise draftsman, when he is dealing with novel issues in course of uncertain development, will deliberately retreat into ambiguity. The principal thing is that Restatement (Second) gives overt recognition to an important principle whose existence Restatement (First) ignored and, by implication denied. By the time we get to Restatement (Third) it may well be that §[86] will have flowered like Jack’s bean-stalk….

Grant Gilmore, The Death of Contract 74-76 (1974).