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Thursday, February 3, 2011

The Demise of Promissory Estoppel


There has been a disturbing decline in many contemporary interpretations of the applicability of the Doctrine of Promissory Estoppel to certain cases. The following three situations are most striking: employment law, disclaimers, and knowledge of the doctrine.

First, we must know what the Doctrine of Promissory Estoppel is. Basically, the Doctrine seeks to enforce promises, which would otherwise not be enforceable. Section 90 of the restatement of Contracts is usually the benchmark test for it's application, stating the following requirements: 

1.) A promise which the promisor should reasonably expect to induce action or forebearance on the part of the promise or a third person
2.) which does induce such action or forebearance
3.) Justice can be avoided only by the enforcement of the promise.

Although it would not fit within a single blog post, there is a litany of cases that have found the doctrine to be applicable to nearly any situation where a promise has been relied upon (most notably, gifts, and construction contracts).

Returning to the three areas where the Doctrine has usually not applied, we can see a concern for many lay people, as these situations may be ones in which they will most frequently interact with the Doctrine. 

First, in employment law, which is usually considered "at will" (freely terminable at any time), parol promises, such as ("The job is yours until you retire," or "You will not be fired") have been held not to have satisfied the requirements of promissory estoppel. These reliance-inducing promises have been held unenforceable, and although the plaintiff took actions to their detriment, in reliance of the above promise, they were essentially out of luck.

Second, the court has held that if a promisor expressly disclaims any attempt to be bound by a promise, even after the promise has been made and relied upon, that no valid contract has existed between the two parties. This is espeically concerning, because it gives some promisors an unequal amount of bargaining power when a contract reaches a certain point (when the promisee actually relies upon the promise).

Finally, if the party either knew, or should have known that reliance upon the promise would likely form no contract, the courts have held that no contract existed. This concept directly affects professionals, or "repeat players" in any form of litigation, regardless of their level of knowledge.

5 comments:

  1. As a law student (in France) by myself, I find your posts really interesting.
    Can't wait for more

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  2. I had an uncle who spent a ton of time studying law, and intellectual property, etc, etc. Always find it so interesting, I'll be looking forward to reading more of your blog!

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  3. Laws about promises, hmmm, I thought pinky swearing was enough.

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  4. im a little confuse i know that an estoppel is basically a defensive move and not a first strike but then how on earth will a conflict estoppel work? good article btw

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  5. I've heard "Doctrine of Promissory Estoppel" thrown around a ton, and I'm glad I can finally understand what it means haha. This is a great blog. I'm really looking forward to more from you.

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