Langer v. Superior Steel Corp

161 A. 571 (1932)

Quick Summary

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Superior Steel Corp. offered a $100-per-month pension to Langer in exchange for his agreement to not seek employment with any of the company’s rivals. Langer complied with the agreement terms, but after four years, the company withdrew its payments. Langer filed a breach of contract lawsuit.

The issue presented in court was whether a non-compete retirement contract between an employer and employee is enforceable.

The court held that the contract was enforceable because it resulted from a negotiated exchange. The company reaped a benefit by forbidding the former skilled employee to work for any competitor.

Rule of Law

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To be enforceable, non-compete agreement have to be based on a valid and equal trade. A contract that induces specific and substantial action or forbearance from the promisee is enforceable to avoid injustice.

Facts of the Case

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At the time of Langer’s upcoming retirement, Superior Steel Corp. (defendant) offered him a $100-per-month pension in exchange for his agreement not to seek employment with any of the company’s rivals. Even so, Langer complied with the letter’s terms, but after four years the company withdrew its payment.

Langer filed a breach of contract lawsuit. The trial court sided with Superior Steel Corp., and the plaintiff filed an appeal.


Issue Icon

Is a non-compete retirement contract between an employer and employee enforceable?

Holding and Conclusion

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Because it was the result of a negotiated exchange, the contract is enforceable. In exchange for a monthly payment of $100, the plaintiff was willing to forgo working for a competitor. By forbidding the former skilled employee to work for the competition, the company reaped a benefit. The ruling was overturned, and the defendant was given permission to file an affidavit in response to the plaintiff’s claim.

On the basis of promissory estoppel, the contract can also be enforced.

Reasoning and Analysis

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The court evaluates both parties to the transaction and concludes that their participation in the contract was mutually advantageous. Consequently, the presence of a bargained-for exchange transforms this agreement from gratuitous to enforceable.

Since the plaintiff served as the defendant’s superintendent in the annealing department for a considerable time and was familiar with the ins and outs of the business, it stands to reason that the defendant would profit from having him not work for a rival firm.

Otherwise, this sort of phrase wouldn’t be necessary. There is no evidence in the record that would have prevented this skilled and experienced worker from looking for work elsewhere but for the condition placed by the defendant. By accepting the regular payments, he effectively consented to the restrictions that prevented him from exercising his legal rights. This agreement in itself was sufficient to support the claim.

Relevant FAQs of this case

What are the acceptable terms for non-compete agreements?

  • Duration: Courts are less likely to uphold noncompete agreements that go on for an extended period. In most cases, the duration of a contract will be no more than two years. In the event of termination, a retirement package is also an option.
  • Geographical constraints: It is appropriate to base the agreement on the actual location of the company’s operations. Generally, the geographical area protected by a non-compete clause is confined to a specified number of miles and a clearly defined territory. The court will determine whether the area specified in the contract is reasonable.
  • Scope of restriction: Under this clause, the kinds of activities and services that are not allowed must be specified.
  • Competition: The company needs to identify its primary competitors. The competitors can be described generally by industry terms rather than by specific names.
  • Entitlement of Breach: The Employer shall be entitled to the damages outlined in this clause in the event of a breach of this Agreement.

What is Promissory Estoppel?

Promissory Estoppel is a legal doctrine that states one cannot break a promise if the other party has relied on it in good faith and stands to lose a great deal if the promise is broken.

Even though a promise can only be enforced if it is supported by a legal contract or agreement, the doctrine of promissory estoppel permits the promise to be enforced without a contract.

For example, if the original goods are defective or damaged, the seller may promise that the purchaser will receive a replacement set if the product is substandard. The buyer then intends to return the product due to its poor quality. Under the Promissory Estoppel principle, the store owner cannot refuse to accept the returned items.

Types of Promissory Estoppel:

  • Promissory Estoppel:
    This type of estoppel occurs when a party makes an express promise to another party. For instance, if I say, “I promise you this car,” and then later back out, you can sue me for breach of contract because I have promised you something.
  • Indirect Promissory Estoppel:
    This type of estoppel occurs when neither party made a promise to the other, but a reasonable expectation existed that they would be bound. For instance, if someone says they will transfer $20 per month from their bank account to you, but then gives you only $10, you may have grounds to sue them for breach of contract if their initial promise was reasonable in light of what they told others about their intentions.

How do courts balance the elements of Promissory Estoppel?

The elements of promissory estoppel are balanced by determining whether the promisee relied on the promise, whether the reliance was reasonable, and whether it was reasonable to expect that reliance to be effective.

The action or inaction of the promisor may be considered when determining whether a party’s reliance on the promise was reasonable or unreasonable.

In evaluating the elements of promissory estoppel, courts primarily consider three factors:

  • The character of the guarantee (was it made with knowledge or with reckless disregard for its effect)
  • The initial act or conduct that created a legal obligation to perform (did you make a promise?).
  • The subsequent behavior that fulfilled the promise (was this performance voluntary?


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