Reliance

Question 1

Where is reliance/promissory estoppel in the Restatement?

Answer 1

§ 90

Question 2

What are the elements of promissory estoppel?

Answer 2

§ 21
PFRI:
1. A promise
2. Foreseeability that the promisee would be induced to perform by the promisor’s promise
3. Reliance in fact
4. Injustice absent enforcement

Question 3

What are the types of reliance cases?

Answer 3

FBI
1. Failed Gift Cases (Ricketts)
2. Incomplete Business Transactions (Orion)
3. Injustice Prong – So shocked need a remedy (Bacardi)

Question 4

What are case illustrations of reliance?

Answer 4

1. Ricketts: In a failed gift case, promisee can recover if you can prove detrimental reliance. Pre contract = no liability, the only exception = reliance. Grandpa promised Katie money so she wouldn’t have to work again. Grandpa died before he could pay her. There was reliance because Katie quit her job thinking she’d get the money. With reliance it’s up to the jury. Rest. 90 says damages are limited to the amount justice requires.
2. Bacardi: PE can arise in cases where there is no K, but the injustice so shocks the court that they provide relief for detrimental reliance. Bacardi promised a regional distributor that they would keep working with them. Bacardi then backed out leading to a devastating loss for distributor.
3. Orion: PE can arise in incomplete business cases where in the leadup to a transaction a promisee can detrimentally rely on a promisor’s promise. Here, P claimed promissory estoppel when it prepared a building and adjusted a layout to the design requirements of a vendor. Court held that a reasonable juror could find that there was PE here.
4. Hoffman v. Red Owl Stores: For PE, the party’s words must only have been definite enough to cause the other party to reasonably rely on them to their detriment. D told P that he needed to only raise 18k to get a franchise. Hoffman’s raised the money. Then D told them to do a bunch of other things, like move towns, start a different store, get a certain amount of land, before getting a franchise. Then they told the Ps that they needed $34,000. Ps sued for their 18k.

Question 5

What are reliance damages?

Answer 5

1. Based on the cost/detriment incurred based on reliance (determined by reasonable past).
2. Running up reliance costs risk the court saying you weren’t unreasonable
3. Reliance damages aim to refund expenses wasted or equivalent losses by the P in reliance on the K, thereby restoring her to the position she would have been in had she not entered into a K with the breaching party.

Question 6

What is NOT covered by the UCC?

Answer 6

SLIAE:
1. Service
2. Land
3. Intellectual property
4. Art
5. Embryos (organic materials)

Question 7

What is culpa in contrahendo

Answer 7

Good faith in contract negotiations. NOT recognized in the US. You can basically do what you want until the contract is signed.

Question 8

What does reliance allow for?

Answer 8

Enforcement despite lack of consideration – there is no contract in reliance cases.

Question 9

What is restitution?

Answer 9

§ 370: A party may recover restitution damages even if there is no enforceable contract if the other party was unjustly enriched. Separate from a contract.

Damages are typically determined by the price of the benefit conferred
(If benefit-conferred test doesn’t work, the court will use the fair-market price for damages)

Question 10

What is a contract implied in law?

Answer 10

*Not actually a contract: based on social circumstances; despite the lack of an express agreement between parties, the intention of the parties as expressed by their actions was to bargain
*Elements: 1. Conferral of a benefit not bargained for AND 2. The benefit is appreciated/accepted by the recipient AND 3. The beneficiary will be unjustly enriched if they don’t compensate the person who conferred the benefit
* Damages: Determined by the price of the benefit conferred

Question 11

What is a contract implied in fact?

Answer 11

• An actual contract not arranged in words but inferred from social circumstances – a tacit agreement. The intention as expressed by their action was to bargain.
• Example: Going to a dry cleaner, not signing a contract and knowing you’ll get your shirts back without having to sue
• Restitution Damages: Fair market price or, if too difficult to calculate, reasonable value of the services

Question 12

What are case illustrations of restitution?

Answer 12

• Campbell v. TVA: Microfilmer was hired by an employee of a library to microfilm journals. Employee had no right to enter into an express contract so it was an invalid agreement. Campbell sued that it was a contract implied in law. The court granted him the reasonable value of his services. (Johnson thinks this should be reliance damages, and the reason why the court didn’t apply benefit conferred was because it would be too unfair, it would be close to 0 because no one looked at the film)
• Bailey v. West: No restitution because the benefit was not accepted. West bought a horse but returns it after he finds out its lame. Seller refuses the return of the horse and Bailey boards it even though he knows there’s an ownership dispute. He sends seller a bill which seller refuses. Bailey continues to care for horse for four years and then sued West for contract implied in law. Court held that there is no CIL or CIF because the benefit conferred was not accepted (Johnson: key issue is that there was an opportunity for Bailey to contract with West, but it was not accepted).