http://www.contractscollege.com More fun with Contract Law with Attorney Steve® jammin on the Litigation Whiteboard®.

WHAT IS PROMISSORY ESTOPPEL?

Promissory estoppel is a legal concept that allows a party to enforce a promise made by another party, even if there is no consideration provided in return for the promise. This principle is based on the idea that if one party makes a promise to another party and the second party relies on that promise to their detriment, it would be unfair to allow the first party to go back on their promise.

The doctrine of promissory estoppel is stated in section 90 of the Restatement of Contracts as follows: "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise."

This rule is applicable in California. (Drennan v. Star Paving Co., 51 Cal. 2d 409, 413 [333 P.2d 757]; Edmonds v. County of Los Angeles, 40 Cal. 2d 642, 653 [255 P.2d 772]; Hunter v. Sparling, 87 Cal. App. 2d 711, 725 [197 P.2d 807]; Frebank Co. v. White, 152 Cal. App. 2d 522, 525 [313 P.2d 633]; Morrison v. Home Savings & Loan Assn., 175 Cal. App. 2d 765, 768769 [346 P.2d 917].)

"The very purpose of section 90 is to make a promise binding even though there was no consideration 'in the sense of something that is bargained for and given in exchange.' Reasonable reliance serves to hold the offeror in lieu of the consideration ordinarily required to make the offer binding." (Drennan v. Star Paving Co., supra, p. 414.)

Promissory estoppel is a theory of recovery which is allowed where injustice can be avoided only by enforcement of the promise, this usually occurring where the plaintiff has made a complete and substantial change of position in reliance upon the promise. (De Zemplen v. Home Federal S. & L. Assn., 221 Cal. App. 2d 197, 207 [34 Cal. Rptr. 334].)