Promissory Estoppel: SU Law PDF

**SU LAW: PROMISSORY ESTOPPEL WORLD** Promissory estoppel is a legal doctrine that prevents a party from reneging on a promise that another party has reasonably relied on. It\'s used when a promise is made that induces action, and the only way to avoid injustice is to fulfill the promise.  Here ar...

**SU LAW: PROMISSORY ESTOPPEL WORLD** Promissory estoppel is a legal doctrine that prevents a party from reneging on a promise that another party has reasonably relied on. It\'s used when a promise is made that induces action, and the only way to avoid injustice is to fulfill the promise.  Here are some key points about promissory estoppel:  - When it\'s used Promissory estoppel can be used when there is no actual contract, or when a contract is oral but should have been in writing.  - What it does Promissory estoppel allows a plaintiff to recover damages, even if there is no contract. The implied agreement created by promissory estoppel is usually as binding as a valid contract.  - How it works Promissory estoppel prevents a promisor from arguing that a promise shouldn\'t be enforced.  - What damages are awarded Courts can award reliance damages, which are the costs spent in reliance on the contract performance.  **ISSUES** -reliance damages and possibly expectation damages -may be entitled to promissory estoppel even if you are a lawyer and "knew better." -a promise that is enforceable even though not supported by consideration. -maybe triggered by gratuitous promises, other promises (like keeping an offer open) -what is reasonable will typically require foreseeability -are statements (alleged promises) to vague, lack clarity and definiteness -what is the context or circumstances in which the promise was made---may determine if reliance is reasonable -court's struggle\-\--should the promise be legally enforceable -detrimental reliance\-\--an action that one is not required to perform -another description\-\--reliance theory or reliance damages -in a commercial context\-\--some things may not be "reasonable" that are reasonable in a non commercial context\-\-\--course of conduct -the doctrine of promissory estoppel (it's a separate cause of action from breach of contract -maybe not reasonable because "you" \-\--"should have insisted on a contract." -may "get you around " the Statute of Frauds\-\--contract that must be in writing -unbargained for reliance\-\-\-\--yet still reasonable to rely --under the circumstances **What Is Promissory Estoppel?** Promissory estoppel is the legal principle that a promise is enforceable by law, even if made without formal consideration when a promisor has made a promise to a promisee who then relies on that promise to his subsequent detriment. Promissory [estoppel](https://www.investopedia.com/terms/e/estoppel.asp) is intended to stop the promisor from arguing that an underlying promise should not be legally upheld or enforced. The doctrine of promissory estoppel is part of the law in the United States and other countries, although the precise legal requirements for promissory estoppel vary not only between countries, but also between different jurisdictions, such as states, within the same country. Key Takeaways - Estoppel is a legal principle that keeps people and businesses from, essentially, going back on their word or promise. - Promissory estoppel helps injured parties to recover on promises made that have led to economic loss when not met. - Promissory estoppel helps injured parties recover damages they suffer due to broken promises by another party. - Promissory estoppel has different applications in different jurisdictions, so it is important to consult a lawyer before considering a case. **Understanding Promissory Estoppel** Promissory estoppel serves to enable an injured party to recover on a promise. There are common legally required elements for a person to make a claim for promissory estoppel: a promisor, a promisee, and a detriment that the promisee has suffered. An additional requirement is that the person making the claim---the promisee---must have reasonably relied on the promise. In other words, the promise was one that a reasonable person would ordinarily rely on.1 Another requirement further qualifies the required detriment component; the promisee must have suffered an actual substantial detriment in the form of an [economic loss](https://www.investopedia.com/terms/e/economicprofit.asp) that results from the promisor failing to deliver on their promise.1 Finally, promissory estoppel is usually only granted if a court determines that enforcing the promise is essentially the only means by which injustice to the promisee can be rectified. An example of promissory estoppel might be applied in a case where an employer makes an [oral promise](https://www.investopedia.com/articles/professionaleducation/11/convincing-work-fund-education.asp) to an employee to pay the employee a specified monthly or annual amount of money throughout the full duration of the employee\'s retirement. If the employee then subsequently retires based on a reliance on the employer\'s promise, the employer could be legally estopped from not delivering on his promise to make the specified retirement payments. **Requirements of Promissory Estoppel** There are three key ingredients for a legal case involving promissory estoppel: the *promisor*, the *promisee*, and *promise* that was not kept. In order to seek damages based on promissory estoppel, a plaintiff must show that: 1. The promisor made a clear and definite promise 2. The promisor made the promise, with the intention that a reasonable person would act on it; 3. The promisee believed the promisor, and acted and relied on that promise in good faith; 4. The promisor later reneged on that promise causing financial harm to the promisee; and 5. The nature of the promise is such that the only way to avoid injustice is by enforcing the promise. **Promissory Estoppel as a Part of Contract Law** Contract law generally requires that a person receive consideration for making a promise or agreement. Legal consideration is a valuable asset that is exchanged between two parties to a contract at the time of a promise or agreement. Ordinarily, some form of consideration, either an exchange of money or a promise to refrain from some action, is required for a contract to be legally enforceable. However, in attempting to ensure justice or fairness, a court may enforce a promise even in the absence of any consideration, provided that the promise was reasonably relied on and that reliance on the promise resulted in a detriment to the promisee. **Example of Promissory Estoppel** As a hypothetical example, imagine a person working in New York who seeks a new job. After a certain number of interviews, they receive a job offer from an employer in California offering a high salary and relocation expenses. The prospective employee immediately quits their job, ends their tenancy, and begins to relocate to California. Upon arrival in California, they learn that the job is no longer available, or has a greatly reduced salary. Because the employee relied on the employer\'s promise, they may be able to seek judicial relief for the expenses they incurred due to the employer\'s promise. As with other aspects of contract law, promissory estoppel is state-specific, so the employee would do best to consult a California attorney before pursuing legal action. **What Is the Difference Between a Contract and Promissory Estoppel?** In contract law, the doctrine of consideration states that there must be an exchange of consideration in order for a contract to be enforced. If one party fails to uphold their end of a contract, the other party can withdraw from that contract.\ Promissory estoppel is the exception to this rule. Under the doctrine of promissory estoppel, even the existence of a promise may be sufficient to enforce an agreement, if the other party has suffered damage as a result of acting on that promise. **What Is Equitable Estoppel?** [Equitable estoppel](https://www.investopedia.com/terms/e/estoppel.asp) is a legal doctrine that prevents a party from taking a position that is contrary to their previous position, if doing so harms the other party. This rule prevents someone from going back on their word in a court of law. What Damages Can Be Recovered in Promissory Estoppel? The rules for promissory estoppel vary by jurisdiction. Generally speaking, a successful case of promissory estoppel may result in the award of either reliance damages or expectation damages. Reliance damages are based on what it would cost to restore the promisee to their economic position before they relied on the broken promise, while expectation damages are based on the cost of putting the injured party in the same position as if the promise had been fulfilled.2 Legal Information Institute. \"[Promissory Estoppel](https://www.law.cornell.edu/wex/promissory_estoppel).\" **The Bottom Line** Promissory estoppel is a legal doctrine that says parties may be liable for broken promises that result in financial harm. As with other legal issues, promissory estoppel cases are highly specific, meaning that it is worth consulting an attorney before pursuing legal action. **PROMISSORY ESTOPPEL TO ENFORCE OR COMPEL PERFORMANCE OF THE PROMISE T ( PAY ON THE PROMISSED PENSION)** **Class: this is Katz v. Danny Dare, Inc.** **Or Transfer the Real Estate:** **Class: This is Harvey v. Dow.** **PROMISSORY ESTOPPEL WHERE THE PROMISOR CANNOT BE COMPELLED TO PERFORM THE PROMISE BUT THE PROMISSEE WAS DAMAGED BY ITS REASONABLE RELIANCE ON THE PROMISE (EMPLOYMENT PROMISE)** We see this in promises of employment. Where one party revokes the promise after another party reasonably and detrimentally relies on the promise: **Class: Alaska Democratice Party v. Rice.** Courts do not compel one party to hire another based on promissory estoppel. Rather, the remedy is money damages. **Class: We also saw this in Pops v. Resorts International:** promissory estoppel was not used to compel Resorts to grant the lease to Pops but rather to compensate Pops for their reasonable reliance on the promise. In Pops, the promise was not exactly clear and definite (95% sure you will get the lease) but it was coupled with Resorts telling Pops\-\--no need for you to renew your lease on the other property\-\--because you are highly likely to get the lease from Resorts. **PROMISSORY ESTOPPEL USED TO ENFORCE THE PROMISE OF A GIFT?**  Courts will find promissory estoppel when a clear and definite promise is made with the expectation that the recipient will rely on that promise, that person does indeed rely on the promise, and withholding what was promised results in "definite and substantial detriment."  Did the promisor know/foresee that the promise of a give would be reasonably relied on the promise to their detriment? Promises to make gifts are---precisely because of their donative character---not supported by consideration. Instead, donative promises are typically enforceable only when the promise reasonably and foreseeably induces the promisee to rely on the promise. Relied upon Donative Promises and Promissory Estoppel Oftentimes, a donative promise is relied on by the promisee. See* Kirksey v. Kirksey,* 8 Ala. 131 (1845). As we said before, the rule is that if a donative promise is relied on by the promisee in a manner that the promisor should reasonably have expected, the promise will be legally enforceable, at least to the extent of the reliance. See *Feinberg v. Pfeiffer Co.*, 322 S.W.2d 163 (Mo. 1959). For example: Tom promises his friend Nicole that he will give her \$100,000 to buy a new apartment. Tom knows that Nicole has been looking for a new apartment and that, once she gets enough money, she will buy one as soon as she can. In reliance on Tom's promise, Nicole goes out and buys an apartment for \$80,000. Tom then refuses to pay Nicole. In such a situation, because Nicole relied on the promise in a manner that Tom should reasonably have expected, his promise will be considered legally enforceable, at least to the extent of the reliance. In other words, a court will require Tom to keep his promise although the court may only require Tom to give Nicole the \$80,000 she spent on the apartment and not the full \$100,000 that Tom promised initially. This aspect of the law is laid out in section 90 of both the First and Second Restatements of the laws of contracts, (treatises on contract law published by the American Legal Institute). The modern rule comes from the First Restatement, which says that "a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." This basically means that, where a promisor should reasonably expect that the promisee will act in reliance on his promise, and the promisee actually does act in reliance on the promise, the promise is binding if enforcing the promise is the only way to avoid injustice. This principal is known as the principle of "promissory estoppel." Under the Restatement First, if a relied upon donative promise is enforceable, it is enforceable to its full extent. In other words, the promisor will have to give the promisee what he promised. So, in our example, Tom would have to give Nicole the \$100,000 that he promised her, even though Nicole only spent \$80,000 on the apartment.  This is known as "expectation damages" because the promisee is awarded that which he expected the promisor to give him. However, the Restatement Second says that "the remedy granted for breach may be limited as justice requires." This makes it clear that damages can be limited to only the extent of the promisee's reliance. In other words, the promisor would only have to pay the promisee enough to avoid injustice. So, in our example, because Nicole only spent \$80,000 on the apartment, the extent of her reliance was \$80,000 and justice would require that Tom repay her \$80,000 and not the full \$100,000 he had initially promised her. This is called "reliance damages" because the promisee is awarded damages only to the extent of his reliance. **IS THE PROMISE TO MAKE A GIFT TO SOMEONE (A UNIVERSITY) IN THE FUTURE, AN ENFORCEABLE PROMISE** In general, a promise to give a gift of money to a college in the future is not enforceable. This is because gifts are irrevocable and part of property law, while promises to make gifts are unenforceable and part of contract law.  However, there are some exceptions:  - Charitable pledges A charitable pledge or promise to make a future gift can be considered a unilateral offer. If the donee charity accepts the offer by incurring liability or detriment, the offer becomes a binding contractual obligation. +-----------------------------------------------------------------------+ | Terms: | | | | **Inter-Vivos Gifts:\ | | **A gift given from one living person to another living person. | | | | **Donor:\ | | **The giver of a gift. | | | | **Donee:\ | | **The recipient of a gift. | | | | **Delivery:\ | | **The transfer of possession from one person to another. | | | | **Constructive Delivery:\ | | **A delivery that is implied in law even though it has not occurred | | in fact. | | | | **Deed:\ | | **A document that serves as an instrument of conveyance for an item | | that, for whatever reason, cannot be physically delivered. | +-----------------------------------------------------------------------+ A gift is a voluntary irrevocable transfer of property from one person to another without consideration. The giver of the gift is the donor, while the receiver is the donee. In addition to being irrevocable, there are three additional elements that a gift must meet in order to be valid: 1. The donor must intend to make a present gift of the property; 2. The donor must actually deliver the property to the donee.  3. The donee must accept the gift. . Donative Intent The donor must intend to presently transfer title from himself or herself to the donee. Intent to transfer mere [possession] of the property is not sufficient. The donor must intend to transfer ownership. (Intent to transfer [possession] creates a bailment, which we will discuss later in the chapter.) In addition, a gift, to be valid, must be unconditional. Please note that a promise to transfer ownership in the future is not a gift. A gift must transfer the interest in the property as soon as it is given. A promise to give a gift in the future is a contract, not a gift; and it will be unenforceable without consideration, like any other contract. As an aside, it is important to note that, unlike contracts, gifts do not need consideration to be binding. A properly executed gift is completely binding and irrevocable even in the complete absence of consideration. As we mentioned before, to be valid, a gift must take effect presently at the time of the delivery. Thus, if A were to give a gift to B with the intent that the gift take effect three months from now, the gift is completely invalid. However, it is possible to give a present gift of a future interest. So, if A gave the gift now with the intent that B be allowed to take possession in three months, the gift could be valid. For example: Father has a painting in his house that he likes very much. For Son's 21st birthday, Father tells Son that he is giving Son the painting, but that he is reserving the right to keep the painting in Father's house until Father dies. Even though Son cannot take possession of the painting until Father dies, the gift is valid since he is now giving the rights to the painting to Son. It is a present gift of a future interest. See *Gruen v. Gruen*, 68 N.Y.2d 48 (1986). Delivery The second requirement is that the donor must deliver the property to the donee. Delivery does not necessarily mean that the object must be handed over directly from the donor to the donee. All delivery means is that the donor must do an act that demonstrates an intent to transfer the property. There are several ways of doing this. Of course, the physical handing over of the property to the donee is the simplest way to satisfy the delivery element. In scenarios where physically handing over the property is impractical, constructive delivery is allowed. Constructive delivery can be accomplished by handing over the means of obtaining ownership or by some sort of symbolic act relinquishing dominion and control over the property. For example:  1. Sam buys Woody a 2013 Lexus for his birthday. It is obviously impossible for Sam to physically hand Woody the car. What he can do is hand Woody a key to the car which would qualify as constructive delivery.  2. Father has a painting in his house that he likes very much. For Son's 21st birthday, Father tells Son that he is giving Son the painting, but that he is reserving the right to keep the painting in Father's house until Father dies. Father lives in New York City, but Son lives in Rochester, New York, which is over 300 miles away. Rather than drive up to Rochester to give Son the painting and then take it back home, Father writes a note to Son, explaining that he is giving Son the painting, but that Father is keeping the painting until he dies. In this case, the New York court allowed the note to serve as a "deed" for the painting; and the transfer of the letter was enough of a symbolic act to qualify as a delivery of the painting itself. See *Gruen v. Gruen*, 68 N.Y.2d 48 (1986). This is also true for items like safe deposit boxes, trunks and safes. If any of these things are impractical to physically hand to the donee, the donor can instead hand over a key that opens the object and this would qualify as a constructive delivery.  It is also possible for a donor to give a gift to a donee through a third person. The third person is acting as the agent of one of the parties. The timing of the gift's completion will depend on who the third person works for. If the third person is an agent of the donor, the gift does not take place until the agent actually delivers the property to the donee. However, if the agent represents the donee, the gift is effective as soon as the donor gives the property to the agent. For example: 1. Fred wants to give Barney a pack of baseball cards. Fred calls in his agent Kazoo to deliver the cards. Fred hands Kazoo the cards and tells him to deliver them to Barney. Before Kazoo reaches Barney, Fred calls Kazoo on his cell phone and tells him to bring the cards back. When Barney hears about this, he sues Fred for the cards. In this case Barney will lose because Kazoo was Fred's agent. Therefore, the gift is not complete until the cards are actually delivered to Barney. Thus, even though gifts are generally irrevocable, Fred can take the gift back because the gift was never completed. 2. Fred wants to give a pack of baseball cards to Barney. Barney calls Kazoo and asks Kazoo to pick up the cards for him. Kazoo goes to Fred and tells Fred that Barney sent him to pick up Barney's cards. Fred gives Kazoo the cards. Fred then calls Kazoo before he has delivered the cards and asks for them back. Kazoo refuses. If Fred sues to recover the cards, he will lose. Since Kazoo was an agent of the donee, the gift is considered complete as soon as the donor gives the property to the donee's agent. In this case, the gift was completed as soon as Fred gave the cards to Kazoo. Acceptance The third element necessary for a gift to be complete is that the donee must accept the gift. This is the easiest element to establish because, as long as the gift benefits the donee, acceptance will be presumed once there is a delivery. This presumption can be overcome by showing that the donee rejected the gift. In addition, a third party can accept the gift on behalf of a donee even without the donee's knowledge, if the gift would benefit the donee. This acceptance can later be negated if the donee rejects the gift when he or she finds out about it. Inter-Vivos Gifts Everything we have discussed in this section applies to gifts between living people, or "inter-vivos" gifts. The words "inter-vivos" are Latin for "between living people." The term "inter-vivos gift" is a slight misnomer because, in fact, all gifts must be between living people. Even the gift causa mortis, which is the subject of the next section, must be between living people to be valid. The only exception to this rule is a gift made through a Will, which takes effect after the death of the donor. A Will requires certain formalities, and the subject of complying with those formalities will be taken up in the course of Wills, Trusts and Estates. Other than gifts made in Wills, all gifts must be made by a living person to a living person. For example: