## Facts

- Reserve Life Insurance Company issued a written bulletin to its field agents announcing an “Extra Earnings Agreement” or “Renewal Bonus Plan.”
- The bulletin described a bonus computed at the end of each 12-month period as a percentage of the agent’s “average monthly premiums in force,” with the percentage tied to the agent’s lapse ratio.
- Agents, including Robert W. Spooner, signed and returned the bulletin, remained employed for the relevant 12-month period, and met the plan’s production and lapse-ratio conditions.
- The same bulletin stated the bonus was a voluntary contribution and reserved to the company the right to withhold, increase, decrease, or discontinue the bonus, individually or collectively, with or without notice.
- After the 12-month period (February 29, 1952 through February 28, 1953), the company declined to pay any bonus.
- The agents sued for the promised bonuses; the trial court awarded recovery to the agents, and the company appealed.

## Issues

1. Whether the bonus bulletin constituted an enforceable contractual promise accepted by continued employment and performance.
2. Whether the company’s reservation of an unrestricted right to withhold or change the bonus rendered the alleged promise illusory and unenforceable.
3. Whether employee reliance and performance could support enforcement where the employer’s promise was wholly discretionary.

## Decision

- The Washington Supreme Court reversed the judgment for the agents and denied recovery.
- The court held the bonus plan created no enforceable obligation because the company reserved the unrestricted right to withhold or modify the bonus at its discretion.
- The court rejected enforcement based on reliance or performance where the only promise was illusory.
- The court refused to disregard or delete the bulletin’s limiting language to create a binding contract.

## Legal Principles

- An employer’s bonus offer can form an enforceable contract if the employer makes a definite commitment and the employee performs the stated conditions, including by continuing service for the specified period.
- Reliance may support enforcement of a gratuitous promise only when there is an actual, non-illusory promise that the promisor should reasonably expect to induce definite and substantial action.
- A promise is illusory when its performance is optional or entirely discretionary with the promisor, including where the promisor reserves the right to withhold or alter performance at will.
- Courts will interpret the offer as written and will not rewrite, delete, or ignore express terms to impose contractual liability where none exists.

## Conclusion

Because the bonus bulletin expressly allowed the employer to withhold or change the bonus with or without notice, it did not bind the employer to pay any bonus even if agents met the stated conditions, so the agents could not recover on a contract or reliance theory.


Spooner v. Reserve Life Ins. Co., 47 Wn.2d 454, 287 P.2d 735 (Wash. 1955)