Cash v. Benward
873 S.W.2d 913, 1994 WL 133397, 1994 Mo. App. LEXIS 658 (1994)
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Rule of Law:
Gratuitous promises unsupported by consideration or a bargained-for exchange are generally unenforceable as contracts, and a gratuitous undertaking only gives rise to a duty of care in tort if it involves a risk of physical harm, not merely economic loss.
Facts:
- David Cash was a staff sergeant in a Missouri National Guard Military Police detachment, where Vicki Benward was the full-time unit clerk and James H. Sisk was her supervisor.
- In August or September 1987, Ms. Benward distributed a brochure for spousal life insurance from a private organization to unit members.
- Mr. Cash, uncertain how to obtain coverage, sent his completed application and an $8 premium check to Ms. Benward, alleging she told him she would forward it, though Ms. Benward did not recall this and forwarding such applications was not part of her duties.
- In November, after his check had not cleared, Mr. Cash inquired about the application's status with Ms. Benward and Mr. Sisk.
- Mr. Sisk allegedly told Mr. Cash that Ms. Benward had 'trashed' his application and promised to 'check into it' and help Mr. Cash send a new application the following month.
- In December, Mr. Sisk gave Mr. Cash a new insurance application form but informed him that he needed to handle the application himself, and Mr. Cash did not complete a new form at that time.
- The night Mr. Cash returned home from the December drill, his wife became ill, was hospitalized, and subsequently died unexpectedly.
Procedural Posture:
- David Cash sued Vicki Benward and James H. Sisk in the trial court (a court of first instance) for breach of contract or, alternatively, for negligence.
- The trial court granted summary judgment in favor of Ms. Benward and Mr. Sisk, ruling that there was no consideration or mutuality of obligation as a matter of law.
- Mr. Cash, as the appellant, filed an appeal with the Missouri Court of Appeals.
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Issue:
Does a gratuitous expression of intent to assist another, without a bargained-for exchange or definite and substantial reliance, constitute an enforceable oral contract, or create a duty of care in tort for purely economic loss?
Opinions:
Majority - ULRICH, Judge
No, a gratuitous expression of intent to assist another, without a bargained-for exchange or definite and substantial reliance, does not constitute an enforceable oral contract, nor does it create a duty of care in tort for purely economic loss. The court affirmed the summary judgment for Ms. Benward and Mr. Sisk, finding no consideration to support an oral contract. Essential elements of a contract, including legal consideration, require a 'bargained-for exchange,' meaning either a benefit to the promisor or a detriment to the promisee. The expressions by Ms. Benward and Mr. Sisk were gratuitous and lacked such an exchange. Mr. Cash's initial failure to send the application directly was due to a lack of understanding, not conscious forbearance, and therefore did not constitute a sufficient detriment for legal consideration. The doctrine of promissory estoppel was also inapplicable because the 'vague indications of intent' would not reasonably induce 'action or forbearance of a definite and substantial character.' Furthermore, the court determined that no negligence claim could survive. While a person who undertakes to act for another gratuitously may incur a duty of care, this duty typically arises where there is a risk of 'physical harm' to the person or property, as stated in Restatement (Second) of Torts § 323. The alleged 'undertaking' by Ms. Benward and Mr. Sisk did not and could not result in physical harm, only potential economic loss, thus failing to establish a tort duty separate from a contract claim.
Analysis:
This case clarifies the strict requirements for contract formation in Missouri, particularly the necessity of 'consideration' as a bargained-for exchange, distinguishing between legally binding agreements and casual social promises. It also defines the narrow scope under which a gratuitous undertaking can create a duty of care in tort law, emphasizing that such a duty typically arises only where there is a risk of physical harm, not purely economic loss. The decision serves to limit the expansion of tort liability for non-contractual, informal promises, ensuring that plaintiffs cannot easily convert failed contractual expectations into negligence claims when no physical harm is involved. Future cases will likely cite this precedent to uphold the distinction between contract and tort duties, especially in situations involving alleged promises that lack formal consideration.
