Enforcement of a Promise-Promissory Estoppel

  1. What is Promissory estoppel

        1. The promisor should have reasonably believed his statement would induce a response by the promisee;
        1. The promisor's statements did result in a response or action by the promisee;
        1. Injustice is avoided only through the enforcement of the promise.

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  2. Allegheny College v. National Chautaugua County Bank of Jamestown
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    • -          Woman pledged 5K to college fund (to be in he name) payable 30 days after her death. She ended up paying 1K while alive. Shortly after she repudiated promise and college filed suit to get balance.
    • -          Cardozo said there was bilateral agreement w/consideration: 1K she gave and college’s acceptance was a promise to make the fund (would’ve spoken up otherwise)
    • -          Not so much a case of promissory estoppel b/c Cardozo found consideration present
  3. Hoffman v. Red Owl Stores
    • -          Hoffman made agreement with Red Owl to pay 18K to set up a franchise and sold off his land and store to get money, then Red Owl backed out of deal
    • -          He got promissory estoppel (satisfied 3 conditions) for his out of pocket expenditures/losses in relying on the promise; he gets reliance damages, not expectancy, b/c there was no contract
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  4. Gorham v. Benson Optical
    • -          employee fired after one day on the job; got the job from a friend who ended up not working with company and company fired b/c his friend wasn’t there anymore
    • -          despite being at-will he was able to recover reliance damages b/c doctrine of promissory estoppel allowed the employee to recover good faith reliance damages when terminated on first day, after the employee had detrimentally and reasonably relied on the promise of new employment
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  5. Stearns v. Emery-Waterhouse Co
    • -          Π was given oral contract by Δ to work at $85k/yr for 5 yrs.  2 yrs. later he was cut to $68K/yr at a different position.  6 mo. later Π was fired. Δ says no contract b/c statute of frauds, Π says detrimental reliance overrides that
    • -          Court says detrimental reliance can’t override statute of frauds, only intent to deceive can
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  6. Bethlehem Steel Corp v. Litton Industries Inc
    • -          case dealt with a $95m deal for ore vessels and hinged on (1) whether there was a contract; and (2) if there was, if its terms were sufficiently clear to render it enforceable
    • -          many open terms like escalation indexes and “buy American” clauses; majority held that since so many millions were at stake even small discrepancies are huge, and that even if there was a contract, there is no way a court could fill in the terms to enforce it; TOO VAGUE
    • -          dissent argued the other way, saying that the court need not "fill in all the gaps" to render a remedy, but rather award what is reasonable; just b/c court can’t figure out every detail doesn’t mean they should toss the whole thing out; they can still fashion reasonable remedy
    • -          if Bethlehem had paid to keep OPTION OFFER OPEN, then there would probably be a contract; opinion also suggests that reliance can act as a substitute for consideration
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Card Set
Enforcement of a Promise-Promissory Estoppel
Enforcement of a Promise-Promissory Estoppel