← The hardest concepts in United States law
In one breath
Promissory estoppel makes a promise enforceable even without the usual bargained-for exchange when the promisor should reasonably have expected it to cause action or restraint, the promisee did act in reliance, and injustice can be avoided only by enforcing it. The remedy may be limited as justice requires.
The picture
The ladder someone promised to hold
A friend says, “Go up, I’ll hold the ladder.” You climb. She lets go and you fall. She made no bargain with you, and you gave her nothing for her help, but she cannot say that nothing she did matters. She invited you to climb, knew you would, and you did. The law holds her to her word, not because of any exchange, but because of what her promise caused you to do.
Notice the parts: the promise, her expectation that you would climb, your climbing, and the harm if she lets go. Notice the remedy too. She may owe you for what the climb cost you, such as the hospital bill, and in some courts the full value of what you expected from reaching the top. And if you climbed somewhere she could never have foreseen, such as onto a neighbor’s roof, her promise does not extend that far.
Where the picture stops working
A ladder is a single event, while the doctrine covers many kinds of promises, from gifts within a family to commercial promises made during negotiations, and courts treat those settings differently. A casual remark does not count unless it is definite enough to be a promise and the reliance is reasonable. And the doctrine is a substitute for consideration within contract law, not a branch of tort law, although its effect resembles one.
How it really works
- 1Was there a promise: a clear, definite commitment, not a prediction, a hope or a statement of present fact?
- 2Should the promisor reasonably have expected the promise to induce action or restraint, by the promisee or by a third person?
- 3Did it in fact induce such action or restraint, and was the reliance reasonable?
- 4Can injustice be avoided only by enforcing the promise? Courts weigh the extent and reasonableness of the reliance, the definiteness of the promise and whether it was a gift or a business promise.
- 5Choose the remedy. The Restatement allows it to be limited as justice requires. Some courts award only the cost of the reliance, others the value of the promise.
Why people get it wrong
- Thinking any broken promise that someone relied on is enforceable. All elements must be met, and the last one is a judgment.
- Equating it with consideration. It is the alternative when there is no bargained-for exchange.
- Assuming the remedy is the full value of the promise. It is often limited to the loss from reliance.
- Treating any change of position as reliance. It must be reasonable and foreseeable to the promisor.
- Using it for misstatements of fact. A false statement of existing fact is a matter of misrepresentation, not of promissory estoppel.
A worked example
The facts are invented
Mrs. Hale tells her nephew Owen, who is training as a chef, “When you finish your course I will give you the store on Fourth Street.” On the strength of that, Owen leaves a paid job and spends his savings on the course. Owen gave nothing in exchange for the store, so there is no bargain. Mrs. Hale then sells the shop to a stranger.
Promissory estoppel asks four questions. Was the promise definite? Yes. Should she have expected Owen to rely on it? Yes, she knew what he was training for. Did he rely, reasonably? Yes. Is injustice avoidable only by enforcement? Quite possibly. A court might award his lost wages and course fees, or, in some courts, the value of the store. If she had said only, “I might leave you the store one day,” there would be no promise, and no reliance could be reasonable.
Try it
A promises B a gift of $5,000 “to help you start a business.” B leaves her job and signs a lease for premises in reliance. A refuses to pay. B gave nothing in exchange. Which analysis is best?
Landmark authorities
Read the sources themselves; this list is a starting point.
- Restatement (Second) of Contracts, section 90
- Ricketts v. Scothorn, 57 Neb. 51, 77 N.W. 365 (1898)
- Hoffman v. Red Owl Stores, Inc., 26 Wis. 2d 683, 133 N.W.2d 267 (1965)
Where to go next
More hard concepts in United States law
- The battle of the forms (UCC 2-207) (Contracts)
- The parol evidence rule (Contracts)
- The business judgment rule (Business associations)
This page is an educational overview. It is not legal advice and not a substitute for the sources: the statute, the rule, the case itself. United States law is made in fifty states and in the federal system, and the rules differ between them. Each page states the usual formulation of the rule and names landmark decisions; your own state, circuit or course may use different wording. Check the primary sources before relying on any rule.