promissory estoppel Flashcards
P estopSubstitute for Consideration
• Reliance and detriment suffered by P substitutes for consideration (exchange) to make the contract binding and enforceable
rs2
R2oC §2: 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
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The elements of promissory estoppel are
(1) There must be a promise;
(2) The promisor should reasonably expect to induce action or forbearance of definite and substantial character on part of the promisee;
(3) Promise does induce such action of forbearance, and
(4) Injustice can be avoided only by enforcing the promise.
charitable subscription
A charitable subscription or a marriage settlement is binding under subsection 1 without proof that the promise induced action or forbearance
Ricketts v. Scothorn
Family Promise
Since the plaintiff (2)quit her job, to her detriment, in good faith reliance on the (1)promise, she showed consideration through promissory estoppel since this (3)detriment would effect her greatly if the promise was not carried out and if she did not receive the allowance from her grandfather.
• Induced reliance – can be independent and rely on the money she is paid (so she can quit or not, but she still expected to be able to rely on the promise WITHIN REASON)
• Has to be some detriment with equitable estoppel – the person who relied on the promise has to have suffered because of that reliance in order to recover
Greiner v. Greiner
Promise for land
Since Frank gave up his existing home and moved his family back to Mitchell county, and (3) established himself on the parcel and made (1) lasting and valuable improvements and expenditures to it, he, in good faith, relied on his mother’s promise for a deed and showed consideration for a binding contract – (4) his mother must execute the deed for him.
How to attack: p estop
Was it reasonable to rely on the promise? (credibility of promisor, definite and substantial character of reliance, formality of the promise, negotiation context.
2. did he rely on the promise? What did the promisor do in reliance? Was it caused by the promise? How related?
The last element is that injustice can be avoided only by enforcement of the promise. This is discretionary of court on a case-to-case basis. What is the position of the promisee before and after?
1- He/she ends up in a better/ same/ worse spot than he was. Was he detrimented?
2- What would happen if we don’t enforce the promise? (Apply subjective evaluation of detriment and injustice)
Where damages are awarded in promissory estoppel instead of specific performance of the promise
o Where damages are awarded in promissory estoppel instead of specific performance of the promise, they should only be such as the opinion of the court are necessary to prevent injustice
Injustice is
o Injustice suffered by reliance demands compensation, with damages limited “as justice requires”
o Contract may not have truly existed – but a promise induced reliance that caused a detriment, which would be consideration to an actual contract
• No breach if contract doesn’t exist despite presence of consideration
• Unjust enrichment for one party requires some sort of equitable relief
Goodman v. Dicker
Reasonable reliance
- Goodman had invested in a store to sell radios, had purchased items, taken orders, and employed staff (detriment)
- According to the court – franchise contract must be created/enforced since Goodman suffered because he reasonably relied on the continued promises of receiving his radios and franchise
Hoffman v. Red Owl
Specific Performance
- Red Owl kept negotiating with Hoffman for a new grocery store establishment – kept imposing conditions on him that he kept complying with throughout the negotiation process, encouraged him to continue purchasing items, leave his employment, etc.
- He reasonably relied on the promise of receiving his store, and then never received it but rather had more and more conditions imposed, so damages awarded in specific performance (Red Owl must give him a store)
Blatt v. USC
No detriment
• Promissory estoppel does not hold here to create a breach of contract since he suffered no unjust DETRIMENT by working harder and pursuing a high academic standard, nor did the school promise anything SPECIFIC because they only stated he would be “eligible”, not that he was a lock for election
Promise
Spooner v. Reserve Life Insurance (775)
• Because the so-called promise of regular bonuses in the bulletin also included a paragraph on how the company could withhold or decrease the bonus without notice, this “disclaimer” imposed conditions on the promise that made it indefinite and based on D’s discretion. (Illusory promise that should not have induced reliance)
Ypsilanti v General Motors
- Even though GM stated their continued production would be subject to “favorable market demand”, their promise of maintained employment was an exchange for a promise of tax abatements, creating consideration and induced reliance on the promise since the community suffered the detriment of decreased tax revenues.
- Appeal – Not really a promise! Since the abatement negotiations were a customary practice in business, and since other evidence and statements suggest that GM was reluctant to make a definite promise as to job creation/retention, it is unreasonable for Ypsilanti to rely on their “puffery” as a valid promise.
Reasonable Reliance
Alden v. Vernon Presley
Ms. Alden (Ginger Alden’s mother) shouldn’t have reasonably relied on Elvis’s promise since she was told it wouldn’t be upheld by his estate and yet still pursued a divorce agreement with an expensive mortgage that she assumed the estate would pay. Reliance has to be reasonable and justified in order to meet elements – if not, then the detriment was brought on by their own stupidity.
