Generally, courts are reluctant to enforce unilateral oral contracts.  However, in a recent Missouri Court of Appeals case, the court reversed a motion to dismiss that originally favored the defendant hospital.

In Jennings v. SSM Health Care St. Louis, a doctor sued his employer hospital for breach of oral contract when the employer failed to pay severance. Dr. Jennings had been working as an Emergency Services physician at St. Joseph’s Hospital West, an SSM affiliate, when SSM called a meeting with all the Emergency Services physicians and informed them that their positions were being outsourced to a third-party vendor. At the meeting, SSM promised severance to all the physicians in exchange for their continued employment through out the transition period. After the transition, Dr. Jennings was fired and he received no severance payment.

At the trial court level, the hospital filed a motion to dismiss arguing that the oral statements made at the meeting could not modify Dr. Jenning’s original written employment contract because the written contract included a “no oral modification” clause. The trial court granted SSM’s motion, but the Court of Appeals reversed. The court reasoned that because Dr. Jennings properly alleged that the oral statements made by the hospital amounted to a valid unilateral oral contract, the “no oral modification” clause failed.

Dr. Jennings also made a claim for promissory estoppel. Promissory estoppel has four elements: 1) a promise; 2) upon which the plaintiff relied to his detriment; 3) the promisor expected or should have expected the reliance; and 4) the reliance resulted in injustice that can only be cured by enforcement of the promise.

In its motion to dismiss, SSM argued that Dr. Jennings failed to show reliance because he remained employed with the third-party vendor after his termination by SSM. The Court of Appeals determined that SSM’s arguments did not support its motion to dismiss. Dr. Jennings successfully pleaded reliance because his petition stated that he relied on SSM’s oral promise of severance when he turned down alternative employment, and he was injured because he passed on an opportunity for a job with better pay and benefits, and also received no severance payment.

It is important to note this case was on appeal from a motion to dismiss. The Court did not rule on the merits, but merely found that Dr. Jennings’ petition stated a claim for relief on its face.