Tutorial for a Promissory Estoppel
Gratuitous promises are generally not enforceable. Promissory estoppel, however, is a principle of contract law that can allow some aspects of an agreement to be enforced even in the absence of a formal contract. Also called detrimental reliance, promissory estoppel occurs when a promise is made that it is reasonably foreseeable a person would rely upon, and the person does in fact rely to their detriment and manifest injustice results. As an equitable remedy, the person who made the promise, the promisor, is prevented from denying the existence and effect of the promise.
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Instructions
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Establish the promise. Plead facts that show the existence of a promise that can be reasonably expected by the promisor to induce action or forbearance on the person receiving the promise, the promisee. Jokes, unreasonable promises, such as the promise of a million dollars for a smile or promises made while intoxicated will probably not satisfy this element of promissory estoppel. But the promise of a professional to conduct some action consistent with their profession is more likely reasonable.
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Show actual reliance. Provide facts that show the promisor or a third party actually relied on the promise. If, for example, an employee is promised a higher salary if she doesn't leave her job and she stays on in expectation of receiving that salary, it must be shown that her decision not to leave was occurred in reliance on the promise of a higher salary.
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Demonstrate manifest injustice. Provide evidence indicating that the actual reliance on the promise resulted in manifest injustice which shocks the conscience. Continuing the example, if the employee was not paid the higher salary and also lost a job offer for a higher salary because she stayed at her old job, the result would strike most people as patently unfair. The prevention of such gross inequity is, in fact, the primary purpose of promissory estoppel.
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Tips & Warnings
All the elements of promissory estoppel must be plead in a complaint and proven in court to succeed. Courts have broad discretion in awarding damages for promissory estoppel. In most cases, damages may be limited to reliance interest, the actual out-of-pocket expenses realized as a result of the reliance. In other cases, when fairness demands it, a court may award full expectancy interest, or the benefit the promisee would have received if the full promise had been enforced like a binding contract.
The principles in this article are based on section 90 of the Restatement (Second) of Contracts. While most states have adopted this section, actual application of promissory estoppel may vary from state to state. Check your state laws and legal precedent, or consult an attorney, before filing a claim of promissory estoppel in your state.
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