Have you ever been in a situation where someone promised you something and failed to fulfill their promise? Unfortunately, you could not do anything about it because, well, there was no binding legal contract to hold them to. What if we told you there was something you could have done – if you had known better?
That is where the promissory estoppel doctrine comes in. The doctrine of promissory estoppel keeps a person from reneging on a promise, even without a legal contract. Either way, having legal help can be useful, which is why speaking to franchise attorney Jason W. Power of Franchise.Law becomes crucial. Follow us as we talk more about this interesting doctrine, including its requirements and a case study.
Promissory Estoppel Explained In Layman’s Terms
In the US, there is a doctrine in contract law that keeps a person from breaking their word when there is no binding contract. This doctrine is known as promissory estoppel; it states that the offended party can recover damages from a promisor.
They can recover the damages, provided they were incurred due to the promise the promisor made to them. This is especially true when the receiver of the promise was banking on the promisor to their subsequent detriment.
That is not to say, however, that the promise cannot be supported by a legal agreement, which the court will enforce. This means that the promise can still be enforced even if the requirements for a valid contract are absent.
What Is Needed for the Enforcement of the Promissory Estoppel Doctrine?
Not every broken promise can be regained; understanding this can save you from the unnecessary stress associated with legal battles. However, you also do not want to assume that your case does not qualify for this promissory estoppel doctrine. Therefore, here is how to know if your case qualifies for the application of doctrine:
- The promisor made you a promise that was significant enough and that anyone would rely on ordinarily.
- You acted on and relied on the promise.
- Your reliance on the promise caused you actual detriment via an economic loss because the promisor failed to deliver on the promise. In other words, you are in a worse position because you relied on and acted on the promise the promisor made to you.
- The only way you can be compensated is if the promisor fulfills their promise, in which case the court becomes involved.
Promissory Estoppel: A Case Study
Three franchisors (Benjamin Franklin, One Hour Air Conditioning, and Mister Sparky) had seven separate franchise agreements with David Plumbing, Inc. (David Michael). Their relationship went sour, and then Benjamin Franklin terminated the agreement. Not only did he terminate the agreement, he also sued David Michael for breaching their agreement.
David Michael says Lance Sinclair, Benjamin Franklin’s brand president, told Ms. Michael he would advocate for a reduction in the buyout price. He reached out several times to get Benjamin Franklin to confirm the buyout price, but the latter ignored the requests.
Meanwhile, Benjamin Franklin filed a motion to dismiss DM’s promissory estoppel counterclaims, but the case did not meet the requirements. Despite DM’s argument of an exception to the general rule, the court maintained that he did not work beyond the franchise relationship. Besides, David had no “clear and definite” promise he could reliably rely on, and he could not identify any of the terms they agreed on for the buyout.
As far as the court was concerned, Sinclair’s promise, at most, only indicated that he would try to get Benjamin to approve a buyout. Also, Benjamin Franklin’s refusal to respond to David Michael’s subsequent inquiries undercuts the allegation of an agreement even further.
Conclusion
If someone promised you something of value and failed to uphold it, you could take legal action against them. From this article, you now understand that you can get them to stay true to their words through the promissory estoppel doctrine. However, we recommend you talk to a local lawyer to be sure that your case meets the requirements for promissory estoppel.
