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What Is Promissory Estoppel?

Promissory estoppel is the legal means by which courts enforce an informal contract between parties.
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  • Originally Written By: Lucy Oppenheimer
  • Revised By: C. Mitchell
  • Edited By: O. Wallace
  • Last Modified Date: 09 December 2014
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Promissory estoppel is a common law doctrine used by courts to enforce promises that have been made and subsequently relied upon. Most of the time, contract law dictates the terms of how promises should be enforced. Promissory estoppel usually comes into play when there is no formal contract, but the parties involved have nevertheless acted as if there was one. Courts use the doctrine in these circumstances to impose a contract on the agreement, usually in the interest of fairness.

In common language, "promissory" means "related to a promise," and "estoppel" is a legal term that essentially means an enforced bar or ban. Judges use the doctrine to ban one person from going back on a promise. Seen from a different angle, the doctrine is a tool to enforce promises, effectively requiring both parties to do the things they said they would. It is often seen as an exception to black-letter contract law.

Importance of Consideration

Under U.S. and English common law, formal contracts have three parts: an offer, an acceptance, and some sort of consideration. "Consideration" is basically any thing of value; it's usually money, but can also be an agreement for services or other favors. Contracts enforced under the doctrine of promissory estoppel are unique in that they are usually missing the consideration piece.

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If an employer orally promises to pay an employee a monthly amount for the duration of her retirement, for instance, there may not be an official contract unless the employer stipulates that this is in exchange for something of value — a certain number of years' service for the company, for instance. Just the same, if the employer changes his mind somewhere down the line, the employee stands to be harmed. If the employee relies on the promise and comes to expect the recurring payments, she may have grounds to sue under the doctrine of promissory estoppel should the employer cut her off.

Detrimental Reliance

Not all promises are eligible for enforcement under the doctrine. First, the party looking for redress must have relied on the promise in some meaningful way in order to have an actionable claim. Second, that reliance must have proved detrimental. This usually means that the person relying must have lost money or experienced other negative consequences as a direct result of relying on the promise. Simply being inconvenienced is rarely enough.

Reliance is essential primarily because the doctrine is built around the idea of fairness. Fairness in law can be difficult to nail down, but almost always revolves around restoring the status quo. If a person has been injured, the law seeks to remedy the injury. Without harm, it can be hard to paint a picture of unfairness.

Use of the promissory estoppel doctrine is limited to cases where it is necessary to prevent an injustice. This means it is used less often than if it were applied to simply do justice — a nuanced but significant difference. Judges and courts do not usually intervene in personal affairs to make them just, but they can help restore balance when someone has been harmed.

Types of Promises

People make many different kinds of promises: promises to perform certain services, to pay certain sums, and to appear at certain places at certain times. While some promises are more straightforward than others, there is no set requirement with respect to what a promise has to look like or how it needs to be worded in order for a court to consider it valid. When promissory estoppel is at play, courts often have to look hard at the facts to discern whether a promise was actually ever made, and if so, what its terms were.

Courts often identify what is known as a "quasi-contract" when the terms of an agreement are unclear, but the results are nevertheless palpable. A quasi-contract is a contract that is implied in law. For example, say Suzanne paints Joel's house. Joel knows Suzanne is painting his house, allows her access to his property, and enjoys the new look — but doesn't sign a contract and never promises to pay Suzanne for her services. The court's imposition of a quasi contract in this instance could hold Joel responsible for the cost of Suzanne's services because he (1) knew about them; and (2) benefited from them.

A court might use promissory estoppel against Joel in order to redress the harm to Suzanne. Even though Joel never explicitly offered to pay for the house painting services, his tacit acceptance of Suzanne and her painting gear day after day implies that he knew about the benefit. Here, the doctrine could re-level the playing field, equalizing both parties in terms of costs and gains.

Differences from Traditional Estoppel

The doctrine of promissory estoppel is different from a similar sounding doctrine, the doctrine of estoppel. Estoppel is a doctrine in evidence law that prevents a person from changing his statements about certain facts. Rather then preventing a party from backing out of a promise, it prevents a person from making conflicting testimonies when it would materially change the outcome of a case or harm another person.

These two doctrines point at a bit of a tug of war in the law. On one hand, courts want to be certain in their decisions. They are, therefore, inclined to want to enforce agreements with factual consideration, and take all testimonies at face value. At the same, however, judges must be fair and must identify — and seek to remedy — instances where promises or statements could lead to injustice.

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andyobi
Post 31

Frank is a 64 year old man who lived with his wife five young children in England. During a telephone conversation with his widowed mother Florence, 88, Florence said she would buy a house in Brisbane and put it into Frank’s name if Frank agreed to migrate to Australia with his family to live with and care for Florence. Immediately thereafter each party began to carry the agreement into effect. Florence paid the air fares for Frank and his family to travel to Australia. Frank, who lived in a rent-free Council house, sold his furniture and other possessions at considerably less than its value in order to meet the departure date. He kept his car until the last moment, and it therefore was sold well below market price.

The family arrived in Australia, with few personal effects and very little money. They found an appropriate house. The house has a main section for Frank and his family, and a detached granny flat for Florence. Florence bought it and put it into her name. Frank did not object as Florence had told him: “It will still be your home albeit in my name”.

Frank and his family, and Florence, moved in but a few days later there was an argument and Florence ordered Frank and his family to leave the house. They complied.

Frank and Florence concede that they had an agreement, and intended it to be legally binding. However Florence’s solicitor says the agreement is not enforceable.

Frank seeks your advice, regarding the following: Why is the agreement not enforceable? Is there any way he and his family can live in the house?

anon946625
Post 29

I took out a loan on my home to build another home on my son's property after my husband (his dad) passed away so I could be closer to family.

My son has his own home on the same property and he and I agreed that if he ever sold his property, that I would be given back the money I paid for building the home and any profits that increased the value of his property. My son and I have a very good relationship and I trust him completely, so we never signed any legal agreement. It was just an agreement between the two of us.

He has now remarried his ex wife who is very money motivated and he will do anything to hold this marriage together for a second time. The first time it was dissolved because of finances and I feel she will try to stop him from giving me back the funds I will need to secure a home since I lost my original home because I could not pay back the loan I took out as I am a senior citizen, so I will be homeless unless I acquire funds to purchase another home.

Would this be a promissory estoppel claim since we both agreed and I assumed he would not break his promise to give me funds when and if he sold his home and his new wife wants to sell?

anon339690
Post 28

Give an example of a situation illustrating the doctrine of unjust enrichment.

anon333637
Post 27

Is it necessary for me to get a court order when I want to confiscate securities deposited by a defaulter while he promised in writing that failure to pay a debt meant I should confiscate securities?

anon333514
Post 26

I have lived at home with my mum for 25 years. She promised me the house was mine and over the years stated many times in front of people and witnessed by my sister that the house was mine.

I have made several improvements to the property, but she has now changed the locks and I am effectively homeless. She says she can't afford it and is selling up. I pay the mortgage, but indirectly to her account. I am now in a no man's land situation because I can't prove the promise by date and writing.

I have spoken to my solicitor who says going to court will prove costly and I will not get hardly any of my money back and if I did go to court, I would probably ending up spending more than I will get out, although depending on the court, I might win the house. The courts, I have been told by my solicitor, have far too much of a sliding scale they can use in these situations and if the person/ judge takes a dislike to you, yes, by face value they will rule against you anyway.

The only way you can win is by making a full record of the date, time and location when any promise is made and have it in clear writing and witnessed by as many people as possible. That way, down the line when they go back on their word, you can present this information. So the question is, how do you prove that you are telling the truth when it seems the 'law' is against you from the start. The answer: You can't. You just have to suffer.

anon237137
Post 25

I was offered a promotion at work that included a raise, insurance, sick days, 40 hrs per week, and paid vacation days. I accepted. One week later, I was called in early to speak to the manager, where all but the raise was rescinded. I instead only received the normal .50 cent raise and and an extra .50 instead of the benefits. Do I have any legal right to sue for promissory estoppel?

imusa16
Post 24

I have a "Promissory estoppel" allegation.

I am working in Company A and got an offer of Company B. Since I am a lawful immigrant, company B had some legal expenses to get me on board.

Now company A made their best effort to get me back and I communicated all the facts to Company B. Whenever I got any mails from them I replied with all the details. I went back to company A.

Now company B is after me with "promissory estoppel" and claiming the legal expenses. I state that I accepted their offer and finally could not join because of the circumstances.

Can they force me to "promissory estoppel"? Is that a legal case?

anon81458
Post 22

Is this true or false? In the absence of extraordinary and unusual circumstances a court will not enforce an offer to enter into a contract on the basis of promissory estoppel where the offer was intended to invite acceptance but, instead of accepting the offer, the offeree relied on the offer to her detriment.

anon73541
Post 21

In my presence, my two sons were offered summer jobs as lifeguards if they were to complete their lifeguard certification. the person who offered them the jobs denies this offer now.

They are university bound next year, relied on this offer, completed their certification as lifeguards and applied for the jobs that they were promised, and now they have no jobs and other jobs that they might have had are now filled because they were promised this one. What can they do?

anon62684
Post 20

Hello, I am working part time at Little Caesars Pizza until I finish school. I live in a small town where there are no good schools. I decided to moved to Athens, GA for school. I was promised that I could transfer. Now after my last day at the job, they said I'm not going to be able to transfer. Now I have no job and they wont pay unemployment. What should I do?

anon52509
Post 19

Since 1990 Laura had been employed full-time as housekeeper for Zach's huge house in Bel-Air.

In 1996 Zach said to Laura during a conversation: “You don’t need to worry about unemployment – I promise that I will employ you to work for me for the rest of your life or until you decide that you would like to retire. Your salary will always be at least $5 per hour above the minimum wage”. No written memorandum of this agreement was ever prepared.

In 2000 Zach said to Laura, “I’m in real financial trouble – I intend to sell the house and move into a bungalow at the Beverly Hills Hotel. I won’t need a housekeeper anymore. Your last day on the job will be in April. Laura, claiming that she had a contract providing for lifetime employment, filed suit for breach of contract. Will the suit be successful? Does this fall under promissory estoppel?

anon35245
Post 18

For many years I used my Diners personal credit card to finance the purchases of mechandise for my store. In many cases in Italy where I was purchasing fashion from different vendors and was asked to call Diners where a supervisor made sure I was the one using my card. I told these supervisor that I was in the process of buying merchndise for my stores and would continue for a day or two. They then told me it was OK and they would post it on their computer so I would not be called again.

I opened a new store in Santa Fe NM. in May 2006 and after having run the balance to 451,000 a supervisor called me and closed my account telling me that it was against Diner policy to have a personal credit card used to purchase commercial merchandise for resale.

I was not able to have them reconsider nor let me pay the balance over time with gradual reduction. I finally got three months to pay the debt but took some time to pay it in full. They charged over $13,000 in penalties and interest. I still owe $7,500 and refuse to pay that balance having had to close the store in 2008 as I never was able to buy sufficient inventory after the cash flow shortfall created by their arbitrary action.

I am being sued and contested it and asked for a jury trial as the affidavit signed by a Diners representative stated that my account was closed because of credit problems. This is not true as my credit score at the was in the high 700 at the time they closed the account.

Question: How does estoppel or promissory estoppel apply in my case?

anon29560
Post 17

I applied, was interviewed and accepted a position with a medical practice, with a starting date approximately 1 month ahead. With that assurance, I put in a 1 month's notice to quit my old job. 1 week before the new starting date for the new position, I was informed that the company was asking its current employees to cut hours and take pay cuts, and therefore I would not be hired.

Do I have any recourse, since I terminated my previous job based on my belief that I had a new job?

anon25253
Post 16

If party A is the landowner, and party B is the lessee and B improves the property. B rents the improved property and the lease expires.

The lease says the improvements belong to the improhe lessor.

When the lease expires, lessee does not want the improvements, but wants the fair value of the same.

Does the lessee have a case for recovery?

TYOsborn
Post 15

Hello, My daughter was already employed when she received a job offer in writing from another company. The company that offered the job rescinded the offer due to unplanned economic cutbacks. She was unable to get her other job back after she put in her two weeks notice. Does she have a case to sue the company that offered her a job then rescinded?

She also applied for unemployment but was denied because she left her place of employment "willingly", but she did try to get her job back, but was told she had already been replaced.

She fulfilled her two weeks notice, but was told she could not stay on further. Didn't they technically fire or lay her off? She wanted to stay and ask to stay.

She is a mother of three and is now left with no job or source of income. Thank you in advance.

anon19888
Post 14

I think I have a possible promissory estoppel case. My great aunt promised me to pay for my college education plus books, but after 3 semesters of her paying, she stopped paying. She gave me no reason, and there were no stipulations when the offer was given. It has been 6 years now since I started college. I have graduated, and now, my student loans (which I had to take out because I couldn't afford college out of pocket) are coming out of the deferment period. I have no real proof that she paid the first 3 semesters because the college does not keep who pays, just how. But, I do have a typed page she gave me when she offered to pay saying it was my "ticket" to school plus books.

Do I have a case? How do I figure out how much books would have been too? As any college student knows, I didn't keep receipts for books! (some I even got on Amazon!)

anon19617
Post 13

If a bank approves a construction loan and sends a loan approval letter and written commitment to lend, and the borrower spends money, signs a contract with a builder and the bank verbally refuses to close the loan prior to expiration, due to a policy change, 2 days from closing escrow, are they liable?

anon19567
Post 12

RE: anon7931 i think your case is nothing to do with Promissory Estoppel, but i think there is a unilateral contract between you and the golf shop.

see cabonic smoke ball case

anon15312
Post 11

There are basic answers for all of the listed problems. Seek legal help of a lawyer or visit your local legal aid center if you cannot afford one. Especially the author of the first posting. They will have law students and lawyers available. Promissory estoppel is a contractual theory to prevent unjust enrichment. Out of the above postings (not counting the law student hypo- nice try buddy) only the first person seems to have a plausible chance of success. Good luck to you all, and remember actual human contact is better if you are dealing in the legal system. The internet can't solve everything.

Rintyg
Post 10

Would promissory estoppel apply in my case? I have lived at home with my mum for the past 30 years, caring for her over the past 9 years as she battled lung disease. My mum didn't get chance to make a will but she promised me that I would be able to have the house. She also made this known to her sister (my aunt). However, 2 days before my mum's funeral, my sisters told me that they want me out so they can sell the house and get "their thirds". This would leave me homeless as I can't afford my own place. I can only work part time as I have health problems. My sisters say I might as well sell up and give them the money because I have no right to stay in the house but then I read about promissory estoppel and wondered whether it might help me.

Any advice would be greatly appreciated.

karunayush
Post 9

Andrew owes Betty $3,000. He is supposed to repay her in full by 1st May 2007. However, on 1st April 2007, Andrew tells Betty to accept a lesser sum of $2,000 from him, as full and final settlement of the sum of $3,000 owed, telling her that that was all he has got. Betty feels that she has got no alternative but to accept the $2,000 from him, and writes him a note saying, “This sum of $2,000 is in full and final settlement of the $3,000 that you owe me”. One month later, however, Betty changes her mind and now demands from Andrew the remaining sum of $1,000 from Andrew.

(a) Please advise Betty whether she can now still demand the sum of $1,000 from Andrew. Please state the relevant legal principles clearly in your answer.

(b) Would your answer be different if:

(i) Betty is the one who had requested Andrew to repay her one month early, that is, to pay on 1st April instead of 1st May 2007?

(ii) Betty had asked Andrew to repay her in Edinburgh in Scotland, instead of the agreed place for repayment of London in England?

(iii) Betty had told Andrew that he could pay her $2,000 and a cheap T-shirt belonging to Andrew, in full and final settlement?

anon7931
Post 8

An advertisement put up by a golf shop promised that I would receive a free golf tutorial book if I bought a certain driver. After buying the right driver, the shop refused me the free book because I work for a competing shop on the other side of town. It wasn't because they had no books left as I saw a big pile of them. Could my case fall under promissory estoppel as I relied on their promise? I only bought that certain driver because of the book and would have gone for another if it wasn't for the offer.

anon5105
Post 7

I moved from San Diego to Washington. I quit my job working for a chain store to move up here and was promised a job with the same chain. The store even held a position for me, I went through all the preliminaries of being hired and when it came time to get a work schedule the Human Resources dept decided to halt the process due to my past felonies. I was looking up what that was called and directed to promissory estoppel. I would like to know if it is possible to act upon this?

anon3644
Post 5

If a person makes any false representation to another and that other person acts on the representation, the person who has made it shall not afterwards be allowed to setup that what he said was false and to assert the real truth in place of the falsehood which has mislead the other. explain this position with decided cases.

anon3230
Post 4

Around 27 years ago, I moved 600 miles to work for another person in a very specialized job. I disolved my successful business in another state to make the move and accept this position under a verbal agreement. It was clear that I dropped EVERYTHING and made the move completely.

After six months of doing a great job, the "boss" got mad (insecurity) and just put me out one night in anger, leaving me holding an apartment lease and leaving me 600 miles from home with NO INCOME or hope of income in that specialized area, having quit my business in another state and moved to work with this guy.

After hearing about "promissory estoppel" I am wondering if at that time, did I have a case?

tool296012
Post 3

I have a problem with a loan company. I have had a major illness and as a result am no longer able to work. The maker of my truck loan has always accepted my loan payments late without adding a late fee, even if it was 2 months late. this has been going on for almost 2 years. All of the sudden they get a new manager in the office and the new manager has my truck repoed. the payment was late by one month. I had relied on the fact that they would accept the payment late, even if it was 2 months late, so I could pay rent,utilities and food.

My question is: is my reliance on their practice of accepting the late payments promissory estoppel or is it implied contract?

drsnickers
Post 2

If my health insurance contract includes a "Promissory Estoppel" clause to the effect that no oral or written statements by any individual can alter the terms of the contract, is or isn't that statement a violation of the estoppel doctrine?

anon421
Post 1

There is no proper law definition of Promissory estoppel and elements of doctrine of Promissory estoppel?

I need clarity on above questions

Thanks

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