Promissory estoppel is an element of contract law. Contracts require three elements: offer, acceptance and consideration. If any of these elements is missing, the contract is invalid. However, promissory estoppel may be substituted for consideration in certain circumstances -- making an otherwise invalid contract enforceable by law.
For a contract to be valid, an offer is first required -- someone must propose the agreement. Acceptance must occur, meaning that the person receiving the offer agrees to it. Finally, consideration must be made -- something of value is exchanged for the agreement. Consideration ensures that both parties have a stake in enforcing the contract. If consideration is missing, one party may uphold its end of the bargain but the other does not. If this occurs, promissory estoppel may be applied in the interest of fairness. Promissory estoppel has three elements: promise, detrimental reliance and avoidance of injustice.
A promise is made that could reasonably be expected to induce someone to do something. For example, if someone promises $50 to a gardener to mow the lawn, he can reasonably expect that the promise will lead to the gardener mowing the lawn. The person making the promise, the "promissory," either must know or should know that this would be the effect of the promise. Whether the person should have known the effect is determined by whether or not the expectation is "reasonable."
The person who was given the promise, the "promisee," relies on that promise in a way that would harm him if it is not enforced. If the gardener in the example mows the lawn, he would be harmed by not being paid the $50 for the work. This is called "detrimental reliance." In other words, if not for the promise, the promisee would not have performed his end of the bargain; it is unfair for him to fulfill his part of the agreement but not receive the agreed-upon benefit.
Injustice can be avoided only through enforcement of the promise -- no other means would result in a fair outcome. By enforcing the original promise, a court validates the agreement as an enforceable contract. If all elements are met, the promise is binding upon the promissor, who must hold up his end of the bargain.
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