Reliance Flashcards
Reliance Damages
recover expenses in reasonable reliance on promise that another would perform. Defendant does not need to benefit from the plaintiff’s expenditures. Assume the contract to be enforced against promisor in accord with its terms.
a) Damages: injured party’s expenditures in contract formation and lost profits. Reliance damages when the lost profits portion isn’t clear.
b) Restore victim as if the contract/transaction hadn’t occurred.
Recover “detriments”—put the person entirely back into the position they were in before the contract.
Equitable Estoppel
(synonymous with reliance—Common Law)Reliance Damages.
Ricketts v. Scothorn
Grandfather promises (note)granddaughter $2,000 + 6% annually because he didn’t want his granddaughter to have to work at a crappy job. Grandfather dies and the $2,000 wasn’t paid. Ricketts, as executor of grandfather’s estate, is estopped from denying the obligation of the promissory note on the ground of equitable estoppel.
i) Common Law: precludes donor’s change of position when there is a good faith reliance on a promise by the donee. This deals with voluntary actions (This is what the court uses here). Typically, this doctrine usually requires a misrepresentation by the donor.
ii) Restatement Section 90: Focuses on donee’s actions and compensates a purported donee to the extent that they relied on the promise. This rule makes it easier for plaintiffs to recover, but limits what they can recover more than common law doctrine. (Granddaughter could only recover the amount of money she would have made if she had remained employed).
Restatement Section 90
when RS 90 governs promissory estoppel
a) Damages must restore detriments from the reliance –>limits recovery more than common law
(Ricketts v. Scothorn) Focuses on donee’s actions and compensates a purported donee to the extent that they relied on the promise. This rule makes it easier for plaintiffs to recover, but limits what they can recover more than common law doctrine. (Granddaughter could only recover the amount of money she would have made if she had remained employed).
Promissory Estoppel (restatement)
Elements:
i) Promise
(1) If there is a contract, look to the contract and rely on the terms
ii) Foreseeable Reliance
(1) Must be able to show that the promisor could foresee that their promise would induce reliance.
iii) Reliance in Fact
iv) Injustice Absent enforcements
c) Charitable Subscriptions (donations/promises to charitable organizations—churches, colleges, etc.). Courts will generally apply the doctrine of promissory estoppel to enforce these promises, they normally don’t require evidence of reliance.
d) Some states refuse to enforce promises unless they are supported by consideration
e) Promissory Estoppel is a loophole
Cohen v. Cowles Media
(Political operative/News organization/scandal leak) A secret in exchange for confidentiality. No contract. Breach of anonymity, which led to Cohen being fired.
i) Anonymity was a condition associated with dispensing the information, it wasn’t a reciprocal promise.
ii) This was a Public Policy Application of promissory estoppel
iii) Holding: No promissory estoppel because issue concerned a future fact and no contract was formed; justice would not be served by enforcement
Midwest v. Orion
Do we reward stupidity?
(1) Plaintiff was led to believe a franchising contract was approved by defendant. Plaintiff modified plans for convenience store as a result. Franchisor ended the relationship with plaintiff. Did Defendant’s promise induce plaintiff to act/forbear from acting? There was no contract in this case because the statute of frauds wasn’t met—we must use only their oral negotiations as evidence.
(2) Court found for the plaintiff. Arguably, the elements of Promissory Estoppel were not met, though. PROF doesn’t like this outcome!
Hoffman v. Red Owl
Grocery store chain induced actions on part of plaintiffs through direct assurances and induced actions (caused them to move). Clear injustice, clear promissory estoppel case.
Fisher v. Jackson
Baker becomes reporter—no reasonable argument here. Court decided his “permanent employment” really was at-will, which means that he cannot recover for reliance since he could have been fired at any point.
Lake Land (Promissory Estoppel argument)
They should have won the case (as they did), but under a reliance argument. They relied on the non-compete that Columber did sign, regardless of its validity. Since they relied on it, promissory estoppel would apply and enforce the agreement.
Culpa En Contrahendo
European doctrine that requires parties to negotiate in good faith. US hasn’t adopted this—prior to formation of contract, you can negotiate in bad faith.
We assume businessmen know, or should know, how to protect themselves and when to reasonably rely.
