Hoffman v. Red Owl

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Hoffman v. Red Owl
Court Wisconsin Supreme Court
Citation 133 N.W.2d 267; 26 Wis. 2d 683
Date decided March 2, 1965

Facts

  • Red Owl Stores, Inc. = "Red Owl" = defendant
  • Red Owl owned & operated large grocery stores; it also extended franchises
  • "Hoffman" = plaintiffs = Mr. & Mrs. Hoffman owned a bakery in Wautoma, Wisconsin; they hoped to enter the grocery business & operate a Red Owl store
  • A Red Owl agent repeatedly told Hoffman that he only needed $18,000 for a franchise
  • Hoffman was advised by Red Owl to buy an independent grocery store before buying a Red Owl store.
  • Next, Hoffman was told to sell his store in order to buy a Red Owl franchise.
  • Following that, Hoffman was told & moved to the town of Chilton where the franchise store would be located.
  • Lastly, Hoffman bought a vacant lot on which the franchise store would be constructed.
  • At that point, Red Owl told Hoffman that he actually would need $34,000 to purchase the franchise ($16,000 more than previously).

Procedural History

Hoffman brought suit against Red Owl for reliance damages (breach of defendants’ representations/agreements)

State trial court found for P → Ordered new trial w/ issue of damages for losses related to the sale of P’s independent grocery store, fixtures, and inventory

Both parties appealed

Issues

To support an action for promissory estoppel, must 1 party's words said to the other party have included the essential details of a proposed transaction, to be equivalent to an offer that would result in a binding contract?

Holding

No. For the doctrine of promissory estoppel to apply, the party's words must only have been definite enough to cause the other party to reasonably reply on them to their detriment.

Judgment

Affirmed

Reasons

Here, Defendant's promise to set P up with his own store doesn’t contain all elements sufficient to give rise to enforceable contract but it can still be enforced under promissory estoppel

Rule

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. - Restatement (First) of Contracts § 90

Comments

Other courts have required a promise to be (1) clear, (2) definite, & (3) un-ambiguous. A different forum may have issued a divergent opinion.

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