Promissory Estoppel

Promissory Estoppel in the United States

Difference between First Restatement 90 and Second Restatement 90: deleted requirement that reliance be of definite and substantial character. Requirement was initially included to allow promissory estoppel into First Restatement (despite no case law on the subject). By Second Restatement, reliance itself was considered to be enough of a basis of consideration.

Second Restatement: remedy for breach may be limited as justice requires. Damages may not be expectancy damages but rather just reliance damages.

Promissory Estoppel is highly debated:
• To what extent is reliance principle of 90 overtaking bargain principle of 75?
• Contract law being reintegrated into general liability/torts framework (Grant Gilmore, Death of Contract)
• Elements of Promissory Estoppel: promise, reliance, justice would only be served by giving some remedy. Gilmore nad others had seen reliance as central to promise; recent scholars have found that the central element of the doctrine has become the promise. Often courts will enforce a promise when there was not real reliance when it is really the promise they are based on.

Alternative theories: economic activity should be basis for enforcement.

Descriptive: You are describing something. Descriptive argument between set of scholars is disagreement on what is reality, or on what cases stand for.

Normative: What should be the case.

As emphasis moves more towards promise from reliance, then expectation damages begins to make more sense as basis for damages. (Third debate: what should remedy be?).

Cases where facts are extreme to one side or another are generally not litigated since it’s not worth it for either side. Most cases are at the margin; one would expect roughly 50% on each side. Yet, promissory estoppel cases prevail very rarely; contract cases in general prevail ten times as often.

Practical Information

Note: Some of this information was last updated in 1982

If a person (the promisor) promises something that he or she knows will induce another person (the promisee) to do something, and that does in fact induce that person to act, the court will enforce the promise to prevent injustice. For example, if an employer promises an employee a pension upon retirement but does not honor the promise, the promise may be enforced by the court.

(Revised by Ann De Vries)

What is Promissory Estoppel?

For a meaning of it, read Promissory Estoppel in the Legal Dictionary here. Browse and search more U.S. and international free legal definitions and legal terms related to Promissory Estoppel.

Promissory Estoppel

Leading Case Law

Among the main judicial decisions on this topic:

Shoemaker v. Commonwealth Bank

Information about this important court opinion is available in this American legal Encyclopedia.

References

See Also

  • Contracts

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