promissory estoppel

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Related to promissory estoppel: Detrimental reliance, Equitable estoppel

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 aswhen 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.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

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)

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.

promissory estoppel

Collins Dictionary of Law © W.J. Stewart, 2006
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may have some merit with respect to the use of promissory estoppel in
Though, as the court observed, the restatement does not use the language "promissory estoppel," that term is widely used in connection with that provision.
When it comes to reliance, the problem that common law judges and the drafters of the Restatement (Second) of Contracts (32) have sought to address is not that common law remedies are so generous as to induce overreliance, but that common law rules regarding contract formation are so formalistic that parties will often reasonably rely on a promise and yet not receive any remedy at all because they relied before a contract had been legally created--this is the problem addressed by the doctrine of promissory estoppel and section 90 of the Restatement.
The doctrine of promissory estoppel might seem consistent with economics because it does not forbid courts to enforce value-enhancing gratuitous promises.
However, the Ohio Supreme Court has created certain exceptions to the rule, among them the doctrine of promissory estoppel. The court observed that the doctrine of promissory estoppel can be applicable to oral at-will employment agreements.
Gordon alternatively contends that these protections arose by reason of its detrimental reliance on Brox's offer, under principles of promissory estoppel, apart from the existence of a contract.
(Microbix' suit alleged not only antitrust violations but misrepresentation, promissory estoppel, breach of contract and interference with economic relationships.)
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