#11040 - Promissory Estoppel - Contracts

1. R2d §90 Promise Reasonably Inducing Action Or Forbearance

(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

(2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.

2. Four elements P has to prove

   1. Promise: objective, manifested intent

      1. Cannot be too vague

      2. R2d §2(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

   2. Fork: promisor reasonably expects to induce reliance: reasonable foreseeable reliance.

      1. Objective standard

      2. Custom practice upon learning the promise can be an argument

   3. actual reliance induced by the promise

      1. causation: B must show that without A’s promise, B would not have done sth (Hayes)

      2. justifiable reaction to the promise: whether a reasonable person in the promisee’s position would have so acted or refrained from acting as a result of the promise.

         1. reputation of the promisor for not honoring his promise, then reliance propably not justified

   4. injustice can be avoided only by enforcement

      1. detriment or harm suffered by the promise

      2. weigh the lack or presence of formality and the apparent deliberateness of the commitment

3. E.g. Feinberg: A has been employed by B for 40 years. B promises to pay A a pension of $200 per month when A retires. A retires and forbears to work elsewhere for several years while B pays the pension. B's promise is binding.

1. Amount of recovery: Where P.E. is used, the damages awarded are generally limited to those necessary to "prevent injustice." Usually, this will mean that the plaintiff receives reliance damages, rather than the greater expectation measure.

2. However, Court has the discretion to award expectation damage.

1. Promise to make a gift: The P.E. doctrine is most often applied to enforce promises to make gifts, where the promisee relies on the gift to his detriment.

   1. Intra-family promises: The doctrine may be applied where the promise is made by one member of a family to another.

      1. Example: P159 a, promise to give rugs

2. Negotiations in good faith: A person who negotiates with another may be found to have a duty to bargain in good faith; if bad faith is found, the court may use P.E. to furnish a remedy.

   1. Court usually do not enforce negotiations because negotiating parties understantd or reasonably should understand that nothing said in negotiations is to be taken as a promise, and no commitment is made until a contract is formed. It’s just a non binding expression of intent.

3. Promises of franchise: The use of P.E. to protect negotiating parties is especially likely where the promise is a promise by a national corporation to award a franchise to the other party. (Example: P, a national company that runs a fast food chain, promises B a franchise. B quits his job and undergoes expensive training in the restaurant business. If A then refuses to award the franchise, a court might use P.E. to enforce the promise, at least to the extent of reimbursing B for his lost job and training expenses.)

4. Promise of job: If an employer promises an at-will job to an employee, and then revokes the promise before the employee...