What Is Promissory Estoppel? Key Requirements and Examples

Promissory estoppel is an equitable legal doctrine that allows a promise to be enforced even when a formal contract (with consideration) does not exist. It prevents a promisor from reneging on a clear promise if the promisee reasonably relied on it and suffered a detriment as a result.

How it works

Courts apply promissory estoppel to avoid unjust outcomes when one party has acted in reasonable reliance on another’s promise. The remedy reimburses the promisee for losses caused by that reliance, or in some jurisdictions, awards the benefit the promisee expected from the promise.

Key requirements

To succeed on a claim of promissory estoppel, a plaintiff typically must show:
* A clear and definite promise by the promisor.
* Reasonable and foreseeable reliance by the promisee on that promise.
* Actual reliance in the form of action or forbearance.
* A substantial detriment or economic loss resulting from the reliance.
* Enforcement of the promise is necessary to prevent injustice.

Jurisdictions vary in how they apply these elements and what remedies they allow.

Relationship to contract law

Contract law ordinarily requires “consideration” (an exchange of value) for a promise to be enforceable. Promissory estoppel is an exception: when enforcing the promise is the only way to avoid unfairness, a court may enforce an otherwise unenforceable promise without traditional consideration.

Damages available

Remedies depend on the jurisdiction and the case:
* Reliance damages: reimburse the promisee for costs incurred or losses suffered because of reliance, restoring their pre-reliance position.
* Expectation damages (less common under estoppel): put the promisee in the position they would have been in had the promise been fulfilled.

Courts generally award the lesser of what is required to avoid injustice.

Examples

• Retirement promise: An employer orally promises to pay a retiring employee a monthly benefit. The employee retires in reliance and suffers financial harm when the employer refuses payment. A court may enforce the promise under promissory estoppel.
• Job-offer relocation: A prospective employer offers a job with relocation assistance. The candidate quits their current job, rents out their home, and moves. If the offer is withdrawn, the candidate may seek recovery for relocation expenses and lost earnings caused by reasonable reliance.

Promissory estoppel vs. equitable estoppel

Equitable estoppel bars a party from asserting a legal position inconsistent with their prior words or conduct when another reasonably relied on them to their detriment. Promissory estoppel is a specific form of equitable estoppel focused on enforcing promises in the absence of consideration.

Practical points

• Outcomes are fact-specific and vary by state or country.
• A written promise strengthens a claim but is not always required.
• Courts will scrutinize whether reliance was reasonable and whether enforcing the promise is necessary to prevent injustice.

Bottom line

Promissory estoppel protects parties who reasonably rely on promises that cause them significant harm when the promisor backs out. Its core elements are a clear promise, foreseeable and reasonable reliance, resulting detriment, and the necessity of enforcement to avoid injustice. Because rules and remedies differ by jurisdiction, consult an attorney if you believe you have a promissory estoppel claim.