Principle of Promissory Estoppel: Everything You Need to Know
The principle of promissory estoppel is a legal concept holds promises as legally binding. Even if a promise is not made with any formal consideration, the promisor, or person making the promise, is held to keep their promise to the promisee, or person to whom the promise is made. 4 min read
2. The Elements of Promissory Estoppel
4. When Do I Use a Promissory Estoppel?
The principle of promissory estoppel is a legal concept holds promises as legally binding. Even if a promise is not made with any formal consideration, the promisor, or person making the promise, is held to keep their promise to the promisee, or person to whom the promise is made.
Promissory Estoppel Basics
Promissory estoppel is meant to keep people from going back on their promises to the detriment of others. The basic principle is that anyone who makes a promise to another party should not do so lightly and should follow through with it.
The legality of promissory estoppel varies throughout the world, but it is certainly fundamental to the United States legal system. Certain jurisdictions have different views of this doctrine.
The Elements of Promissory Estoppel
In order for the principle of promissory estoppel to apply, a few elements must be in place, namely:
- A legal relationship
- A representation of fact or future fact (promise)
- Proof of detriment due to misrepresentation of fact or broken promise
- Proof of inequity between the parties (unconscionability)
The two parties must have a legal relationship of some type in existence or anticipated. Most commonly, this will be a contractual relationship, meaning that the two parties have formed a legal agreement. If two parties are in the process of negotiating a contract, they are considered to have a legal relationship.
One of the two parties must make a promise to another or the representation of a fact. Before 1988, estoppel only applied to representations of facts, but the case of Waltons Stores Ltd v Maher resulted in a decision by the High Court to extend the principle to representations of actions in the future, otherwise known as promises.
This concept of promissory estoppel comes up when one party gives the other the idea that some action will be done and the other assumes that it will happen based on that representation.
In order to hold up in court, the victim has to be able to show that the other party made a promise in a way that causes the victim to assume they would follow through. The promise also has to be reasonable and believable.
The lack of follow through on the promise has to have been detrimental to the victim, or injured party. Basically, the injured party has to be able to prove that they are worse off than they were prior to the promise being made because they relied on it.
There are no laws requiring people to keep their promises, so in order for promissory estoppel to be enforced, an element of unconscionability has to be shown. It must be proven that, if one party doesn't fulfill their promise made to the other, it would create a circumstance of inequity between the parties especially when they have entered into a contract together.
Most courts require all of these elements to be present in order to enforce promissory estoppel. Some do require a bit more to take place before they'll enforce it. Because the original case from which this concept came surrounded an issue of the promise of property and then action was taken on the assumption of the transfer of said property, some courts only enforce promissory estoppel when the issue is a similar case.
Frequently, the plaintiff in these cases is given an award that covers the cost of the promise that was made. Other times the plaintiff is simply awarded an amount that is deemed sufficient to cover the financial detriment they suffered.
If someone has found themselves the victim of a seriously detrimental broken promise, their remedies are equitable. It is therefore up to the court to decide what is owed to the injured party to right this wrong. This doesn't always mean that the promisor will be required to fulfill their promise, but sometimes the court will decide that's the most just action to take.
When Do I Use a Promissory Estoppel?
If someone wants to remedy a broken promise, or "raise estoppel," they will need to formulate a clear case that shows the inequity created by the promisor not following through with their promise. The best way to properly raise estoppel is to get the help of an experienced lawyer. This concept of inequity or unconscionability is the foundation of the principle of promissory estoppel.
All broken promises are not subject to estoppel, but there needs to prove that the lack of follow through was clearly detrimental to the injured party and that the promisor encouraged the promisee to rely on the promise.
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