Promissory Estoppel

In the law of contracts, the doctrine that provides that if a party changes his or her position substantially either by acting or forbearing from acting in reliance upon a gratuitous promise, then that party can enforce the promise although the essential elements of a contract are not present.

Certain elements must be established to invoke promissory estoppel. A promisor—one who makes a promise—makes a gratuitous promise that he should reasonably have expected to induce action or forbearance of a definite and substantial character on the part of the promisee—one to whom a promise has been made. The promisee justifiably relies on the promise. A substantial detriment—that is, an economic loss—ensues to the promisee from action or forbearance. Injustice can be avoided only by enforcing the promise.

A majority of courts apply the doctrine to any situation in which all of these elements are present. A minority, however, still restrict its applicability to one or more specific situations from which the doctrine emanated, such aswhen a donor promises to transfer real property as a gift and the donee spends money on the property in reliance on the promise.

With respect to the measure of recovery, it would be unfair to award the plaintiff the benefit of the bargain, as in the case of an express contract, since there is no bargain. In a majority of cases, however, injustice is avoided by awarding the plaintiff an amount consistent with the value of the promise. Other cases avoid injustice by awarding the plaintiff only an amount necessary to compensate her for the economic detriment actually suffered.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.