what is promissory estoppel with examples

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Author: Sarthak Bhalerao

Table of Contents

  1. What is Promissory Estoppel?
  2. Understanding Promissory Estoppel
  3. Requirements of a Promissory Estoppel

 

What is Promissory Estoppel?

Promissory Estoppel is a doctrine in contract law that stops a person from going back on a promise even if a legal contract does not exist. In simple terms, promissory estoppel is where we have a promise without a return or consideration, but the party might still be liable for the promise. There are 3 things that are necessary for a contract: offer, acceptance, and consideration. There is no contract even if one of the three do not exist. In Promissory Estoppel, instead of consideration, we have a promise inducing reasonable reliance and the court finds some liability for the promise. This states that the aggrieved party could recover damages from a promisor if the damages incurred were the result of a promise made by the promisor. 

Understanding Promissory Estoppel

Promissory Estoppel enables an injured party to recover from a promise made to them. There are 3 important legalities when it comes to claiming Promissory Estoppel: a promisor, a promise and detriment that the promise has suffered. The promise should be something that a person would ordinarily rely on. Due to the promisor, the person must have suffered an economic loss resulting from the promisor failing to deliver on his promise. Finally, promissory estoppel is only granted by the court if enforcing the promise is the only way to get the misconduct rectified.

In Cohen v. Cowles Media Co. 501 US 663 (1991), the supreme court passed promissory estoppel as a “state law doctrine creating legal obligations never explicitly assumed by the parties that are enforceable.”   This means that an agreement made by the promissory will have the same binding effects on parties that a valid contract would. 

Requirements of a Promissory Estoppel

The following elements must be present for promissory estoppel to be enforceable:

  • A promise made by the promisor must cause the promisee to act on it

          The promise must be significant enough so that any reasonable person would rely on that promise. 

  • Promisee relied on the promise

          The promisee must have acted on the promise made by the promisor even though it was not supported by consideration. 

  • The promisee must have suffered damage by relying on the promise

          The party must have faced economic loss due to the promise. The loss faced must be due to the promise of the promisor. 

  • Fulfilment of the promise is the only way to give justification

          Promissory Estoppel is enforced if the court determines that the only way to get justice is by enforcing the promise. However, the court has discretion            in choosing what to do in such a case. 

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