Promissory Estoppel

Promissory estoppel is an important doctrine in contract law in which a non contractual promise lacking consideration rendered enforceable to avoid an injustice. Promissory estoppel arises when injustice can be avoided only by means of the enforcement of a promise that would otherwise be unenforceable for lack of consideration. It is usually applied in cases in which a party has relied on another party’s promise, and that party’s nonbinding promise will be enforced because to do otherwise would be unfair. Promissory estoppel is commonly used in the context of charitable donations. In some jurisdictions the charity must have reliance on the promise but in others reliance is not necessary.

The concept of quasi contract is somewhat similar in that such contracts have the same effect of enforcing a promise in order to avoid an unjust result, however in such cases there had been no promise in the first place.

One case in which the court applied the doctrine to render a contract otherwise lacking in consideration enforceable was McIntosh v. Murphy. That case involved a verbal agreement to hire the plaintiff at the defendant’s auto dealership in Hawaii for one year. After moving all the way to Hawaii he was fired two month later. The court found in favor of the plaintiff because he had relied on the promise of the defendant and had rendered part performance.

In Miller v. Lawlor, the court concluded that it was not necessary to determine the relative applicability of the doctrines of part performance versus estoppel because it was not necessary to distinguish them. The court in that case noted that other courts had recognized that promissory estoppel had become recognized as another form of consideration or consideration substitute. The court ultimately held that the language in the contract was sufficient to support a finding that the contract was enforceable via application of the doctrine of promissory estoppel.

In Peoples Nat. Bank of Little Rock v. Linebarger Const. Co., the court applied the doctrine of promissory estoppel in determining the amount the plaintiff bank would recover from Linebarger. In that case there had been special circumstances that had indicated a particular purpose in using the money, and the court stated that if not for those circumstances the court might have awarded the plaintiff the entire amount of the representation. In that case the money was used for the payroll and the bank was not free to let Cart use it for other purposes.

In the case of Salsbury v. Northwestern Bell Telephone Co. the court justified the application of the doctrine of promissory estoppel as a matter of public policy. In that case the court held that for charitable contributions no showing of consideration or detrimental reliance was necessary. The court in this case followed the rule as stated in the Restatement (2d) of Contracts § 90. In that case Northwestern Bell had promised to give Charles City College $15,000 and the court compelled it to pay even though there had been no detrimental reliance.