What is Promissory Estoppel?

Is a promise a contract? Legally, it is not. A promise, on its own, has no elements of an actual contract. It has no offer, no acceptance, no consideration, and not even a meeting of the minds.

But don’t let that fool you—a promise, specifically a broken promise, can absolutely form the basis of a lawsuit, and in some cases, you can end up owing money to someone else as a result of a promise made and unkept.

Promissory Estoppel

The legal term for the concept is called promissory estoppel.

In simple terms, promissory estoppel happens when someone makes a promise (the promisor), and the promisor knows that the promisee relied on that promise. Untimely, the promise is not fulfilled, leading to the promisee’s detriment or loss.

Let’s imagine that Sarah tells Tom that she wants to hire him for her business, and tells him to quit his job, and come work for her. Relying on that promise, Tom does just that. However, Sarah rescinds her promise and does not hire Tom.

Sarah never technically made a contractual offer—there are no definite terms, and there is no real consideration between the parties. However, there is a promise, which Tom relied upon to his detriment—specifically, he quit his job, expecting to be hired pursuant to Sarah’s promise.

Proof of Promissory Estoppel

To have an action for promissory estoppel, there must be a clear promise to do or not do something. The promise doesn’t have to be in writing, but proof is of course easier when the promise is actually made in writing.

The promisee’s reliance on the promise must be reasonable under the circumstances. Courts will often also ask whether it would be unjust not to enforce the promise between the parties.

Like many contracts, there is a four year statute of limitations to bring an action for promissory estoppel.

Back Up Claim?

Promissory estoppel is often used in lawsuits where there is a chance that a breach of contract action may fail. For example, if someone feels that their contract may not have a valid offer or where there may not be valid acceptance, a cause of action for promissory estoppel can act as a “back up” claim in the event that the breach of contract cause of action should be unsuccessful.

Getting Damages

Damages for promissory estoppel are the losses that the promisee sustained as a result of relying on the promise. This requires actual proof of what was lost and is unlike contractual damages, which may provide for a wider range of damages, like attorneys fees or consequential damages.

In our example above, if Sarah had broken a valid employment contract, Tom may have been able to recover what he expected to get under the contract—specifically, his wages for working at the job which wasn’t offered to him.

But under promissory estoppel, he could only get whatever he has lost as a result of relying on the promise.

What cause of action works for your case? Ask us. Call the West Palm Beach business litigation lawyers at Pike & Lustig today for help handling your employee legal matters, and any legal issue surrounding your business or company.

Source:

media.floridabar.org/uploads/2020/12/416.46-Promissory-Estoppel.docx