Promissory estoppel
In United States contract law, a promissory estoppel allows a party to enforce a promise even if no contract was formed. (See Restatement (Second) of Contracts ยง 90 (1981))
In short, a promissory estoppel is not supported by consideration.
Elements[edit | edit source]
A promissory estoppel requires 3 elements:
- a promise: this promise reasonably induces the promisee's action or forbearance (not doing something)
- reliance: the promisee would have to rely on the promise. The promissee's reliance is roughly equivalent to consideration. This reliance needs (1) substantial action and (2) justifiable reliance.
- detriment: the promisee must have suffered substantial detriment.
For example, a mother can promise to fully pay for her daughter's college education only after her graduation with a bachelor's degree in physics (no other subject allowed) in less than 5 years. If mathematics and physics aren't the daughter's forte, she will have to incur a detriment by studying much harder, study for many more hours, & pay for additional study materials than if she were majoring in history with a strong background in history. If the mother, after 4 years that her daughter faced the opportunity cost of not working and studying full time, taking on student loans, and so, informs her daughter that she won't pay for any of her education, then this situation causes an injustice for the daughter.
Pre-existing duty rule[edit | edit source]
Neither a contract nor a promissory estoppel may be used when the pre-existing duty rule applies. For example, a grandmother wanted to motivate her 15-year-old grandson, who had recently gotten out of juvenile detention, to not use illegal drugs (forbearance). They verbally made a deal that if the grandson refrained from illegal drugs, the grandmother would give him $20,000 for his 18th birthday. This promise of $20,000 induced the grandson to stay away from illegal drugs.
In the preceding paragraph, the grandmother's promise is not enforceable either as a contract or under the doctrine of promissory estoppel. The grandson already had a pre-existing duty rule to not use illegal drugs. He actually benefited from forbearance.
UCC: sale of goods[edit | edit source]
The UCC rejects the pre-existing duty rule for the sale of goods.
Cases[edit | edit source]
- Ricketts v. Scothorn, 1898
- Hoffman v. Red Owl, 1965
- All-Tech Telecom v. Amway, 1999
- Blinn v. Beatrice Hospital, 2006
- Dixon v. Wells Fargo, 2011
