Promissory Estoppel

In the law of contracts, the doctrine that provides that if a party changes his or her position substantially either by acting or forbearing from acting in reliance upon a gratuitous promise, then that party can enforce the promise although the essential elements of a contract are not present.

Certain elements must be established to invoke promissory estoppel. A promisor—one who makes a promise—makes a gratuitous promise that he should reasonably have expected to induce action or forbearance of a definite and substantial character on the part of the promisee—one to whom a promise has been made. The promisee justifiably relies on the promise. A substantial detriment—that is, an economic loss—ensues to the promisee from action or forbearance. Injustice can be avoided only by enforcing the promise.

A majority of courts apply the doctrine to any situation in which all of these elements are present. A minority, however, still restrict its applicability to one or more specific situations from which the doctrine emanated, such as

when a donor promises to transfer real property as a gift and the donee spends money on the property in reliance on the promise.

With respect to the measure of recovery, it would be unfair to award the plaintiff the benefit of the bargain, as in the case of an express contract, since there is no bargain. In a majority of cases, however, injustice is avoided by awarding the plaintiff an amount consistent with the value of the promise. Other cases avoid injustice by awarding the plaintiff only an amount necessary to compensate her for the economic detriment actually suffered.

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promissory estoppel n. when a person makes a false statement to another and the listener relies on what was told to him/her in good faith and to his/her disadvantage. In order to see that justice is done a court will treat the statement as a promise, and in a trial the judge will preclude the maker of the statement from denying it. Thus, the legal inability of the person who made the false statement to deny it makes it an enforceable promise called "promissory estoppel," or an "equitable estoppel." Example: Bernie Blowhard tells Arthur Artist that Blowhard has a contract to make a movie and wants Artist to paint the background scenery in return for a percentage of the profits. Artist paints, and Blowhard then admits he needed the scenery to try to get a movie deal which fell through and there are no profits to share. Artist sues and the judge finds that Blowhard cannot deny a contract with Artist and gives Artist judgment for the value of his work. (See: estoppel)