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Modern businesses would be unable to carry out daily functions if they were unable to rely on the promises made by suppliers, shippers, and any other firms with whom they transact in goods or services. Consider a manufacturer of cleaning products that relies on the delivery of chemicals by a supplier. These chemicals are to be used as ingredients to manufacture the company’s products in order to, in turn, meet its own delivery obligations to retailers. If the inputs are not delivered, then the manufacturer cannot produce the products promised to the retailers.
The vast majority of the time, businesses execute contracts between themselves and other business entities in order to enforce the promises upon which they rely, but sometimes no contractual agreement surrounds a promise upon which an individual or business entity relies. If the promissor fails to perform, the promissee can suffer detriment as a result.
The Legal Information Institute at the Cornell University School of Law defines promissory estoppel as “[t]he doctrine allowing recovery on a promise made without consideration when the reliance on the promise was reasonable, and the promissee relied to his or her detriment.” The phrase “without consideration” means that no contract is in effect. Consideration is an element of a contract and refers to some obligation each side owes to the other.
Three elements are necessary for this doctrine to take effect: 1) a promise that the promissor reasonably should expect to produce action or forbearance on the part of the promissee, 2) actual and reasonable reliance on that promise on the part of the promissee, and 3) detriment suffered as a result, the injustice of which can be rectified only by enforcement of the promise. No contractual arrangement is required for this doctrine to be invoked and therefore, it is easier to prove in court than its close cousin, Detrimental Reliance, which does require a contractual arrangement.
In a case that largely contributed to the legal enforcement of a promise based on this principle, Hoffman v. Red Owl Stores, Inc., 26 Wis.2d 683, 133 N.W.2d 267 (1965), the plaintiff, Hoffman, negotiated with Red Owl Stores to open a franchise store of his own. Red Owl promised to grant Hoffman a franchise upon his tendering $18,000. After Hoffman took action to raise the funds stipulated by Red Owl and to open his store, including selling his bakery, securing a site for the store, and moving his residence, the store chain raised the price. Hoffman sued since the promise made by Red Owl reasonably induced his reliance and he suffered detriment upon Red Owl’s failure to perform by granting the franchise when the agreed upon funds were tendered. The court found in Hoffman’s favor on most of his claims.
Get legal assistance to enforce a promise
If you have suffered some harm because a promise made by another failed to come to fruition and you reasonably relied on that promise to your detriment, do not allow the injustice to stand. The courts of this nation exist to protect private individuals and businesses against the wrongs of others, and precedents set in other cases have paved the way for your recovery. Contact the experienced attorneys at The Kamerow Law Firm, PLLC,for a free and confidential consultation by calling 703-370-8088.