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Can Reliance on a Promise Become a Contract?
Where there is no binding contract, but one party makes a promise to the other, there may be rare occasions where the promise can be enforced. This “promissory estoppel” theory is very rarely accepted as an argument by the courts, and is only applicable when enforcement of the promise is necessary to avoid an injustice.
What Do I Need to Prove for a Promise to Become a Contract?
In order to prevail on a promissory estoppel claim and have a promise enforced, you must show the following:
- A promise was made
- Relying on the promise was reasonable or foreseeable
- There was actual and reasonable reliance on the promise
- The reliance was detrimental
- If the promise is not enforced, injustice will result
When Is a Promise Not a Contract?
A promise is made by one party without anything given in return. For example, when one person promises to give another person a car for his 30th birthday, the promise is not a contract and there is no breach of contract claim because there is nothing given in exchange for that promise. In a binding contract, there are promises to incur a legal obligation on both sides, and they are given in exchange for the other’s promise to incur a legal obligation.
When Is It Reasonable to Rely on a Promise?
It is reasonable to rely on a promise when the circumstances suggest that the person making the promise expected you to rely on that promise. For example, it is not reasonable to rely on a person’s promise to give you one million dollars if you know they don’t have that amount of money.
What Constitutes Reasonable Reliance?
Even when it is reasonable to rely on the promise, the reliance itself must be reasonable. For example, if someone promises to give you a certain amount of money, it is not reasonable, in reliance on that promise, to go out and spend more than the specified amount.
Do I Need a Lawyer?
Proving the elements of detrimental reliance on a promise can be difficult. Also, the laws may vary according to the state or the court. An experienced business lawyer can help you determine whether you may be able to enforce a promise.
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Last Modified: 09-24-2014 11:02 AM PDT
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