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Promissory Estoppel & Contract Claims

What’s the difference between promissory estoppel and breach of contract? As you most likely may guess, a breach of contract indeed requires the existence of a valid enforceable contract. Among other things, an offer, acceptance, and valid consideration must be present.

Promissory estoppel, however, is a much broader cause of action which can be used to enforce promises that fall outside a contract. The essential elements of promissory estoppel are: 1) a promise; 2) detrimental reliance on the promise; 3) the promisor should have or did in fact clearly foresee the precise action which the promisee took in reliance; and 4) injustice can only be avoided by enforcement of the promise. A classic case from Missouri illustrating this legal theory is Katz v. Danny Dare, Inc., 610 S.W. 2d 121, 126 (Mo. Ct. App. 1980). In that case, the plaintiffs retired from their jobs with the employer’s promise that they would receive a lifetime pension. There was a promise insofar as the employer vowed that plaintiffs would receive the pension. The plaintiffs reasonably relied on these statements to their detriment by retiring from their occupations. The employer should have foreseen (or did in fact foresee) that the plaintiffs would retire in light of the promises. And because the court determined that injustice could only be avoided by ordering the employer to continue making the payments, the elements of promissory estoppel were met.

While at first glance promissory estoppel seems like a broad and flexible claim, it is not invoked with frequency. One reason for this is that the promises are often made orally and it is difficult to pin down with precision the nature and scope of the promise. The lack of a writing may also cause more substantive problems when one considers the statute of frauds, which requires that certain contract be in writing and signed by the party sought to be charged before a court will entertain it. See Sales Services, Inc. v. Daewoo Int’l Corp., 770 S.W.2d 453 (Mo. Ct. App. 1989) (discussing the conflict between promissory estoppel and the statute of frauds).

Contact us with questions pertaining to promissory estoppel or contracts.

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