Summary
Teeven discusses the commercial roots of promissory estoppel to furnish background regarding the early sources of the justifiable reliance principle existing at law and in equity prior to the mid-nineteenth century. He also provides evidence regarding the types of transactions in which justifiable reliance recovery was available during the seven or so decades prior to the first Restatement.
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Extract
Origins of Promissory Estoppel: Justifiable Reliance and Commercial Uncertainty Before Williston's Restatement
I. INTRODUCTION
Between the early 1860s and the 1926 proposal for a promissory estoppel section in the Restatement of the Law of Contracts (Restatement), American courts, with some regularity, granted justifiable reliance relief on commercial promises designed to adjust to uncertain conditions. While some commentators overlooked, or chose not to acknowledge, these early commercial reliance-based decisions, other writers forthrightly rejected the doctrinal propriety of allowing recovery. The denial that nineteenth century courts had bound commercial promisors on the grounds of justifiable reliance reflected the conventional belief that the origins of justifiable reliance relief resided in nineteenth century hardship decisions involving gratuitous promises.Contrary to that accepted account, the following legal history of the justifiable reliance doctrine documents that courts regularly granted commercial promisees relief from reliance hardship for many decades prior to the first Restatement. More often than not, these reliance-based decisions provided a means to overcome doctrinal obstacles to enforcement of novel promises crafted to deal with uncertain economic conditions. Much has been written about the development of justifiable reliance relief subsequent to Williston's inclusion of a promissory estoppel section in the Restatement; however, except for the generalizations of the authors of the Restatement, or restaters and their contemporaries, surprisingly little legal history has been written about the development of the justifiable reliance doctrine prior to the Restatement.The story begins around the early 1860s as business planners found it increasingly necessary to incorporate greater flexibility into their agreements to contend with economic unpredictability in the context of longer-term relationships. Promissory innovations in the form of open-ended language, unilateral contract offers, atwill relations, and the more frequent need to modify contract terms butted up against traditional contract doctrine developed during earlier, more static times. Strict common law demands for definiteness, mutuality, reciprocity of bargain and the related preexisting duty rule scuttled attempts for more malleably structured agreements.Mounting cases of reliance harm, caused by doctrinal barriers to these unorthodox arrangements, stimulated nineteenth century courts to ameliorate the harshness otherwise generated by traditional rules applicable to contract formation, modification, and termination. Courts justified granting reliance relief through extensions of theories found both at law and in equity; the theories in support of this relief were typically an admixture of legal and equitable notions. Archaic principles opposed to flexible promises fueled growth in the role of justifiable reliance in overcoming resultant unfairness. Justifiable reliance recovery would be a harbinger of twentieth century reforms of some aspects of the inflexibility of formal doctrine.This study of the commercial roots of promissory estoppel begins in Section II with an extension of this Introduction as a means to furnish background regarding the early sources of the justifiable reliance principle existing at law and in equity prior to the mid-nineteenth century. Section III focuses on Williston's justifications, and the constraining consequences thereof, for the Restatement's sections on bargain consideration and promissory estoppel. Section IV provides evidence, contrary to Williston's claims, regarding the types of transactions in which justifiable reliance recovery was available during the seven or so decades prior to the first Restatement. Williston's denial that commercial reliance relief had previously been given has had a dampening effect on justifiable reliance relief to this very day. The present examination is comprised of case law analysis of reliance recovery granted on commercial promises from around 1860 until Williston unveiled the promissory estoppel section in 1926. These commercial promises were structured to deal with uncertainty in forms incompatible with principles applicable to offer and acceptance and to contract modification. Section IV addresses the obstacles found in the doctrines of offer and acceptance and of consideration to enforcement of offers that were unilateral, indefinite, or at-will. The enforcement of contract modification promises is also examined in Section IV.II. BACKGROUND: EARLY SOURCES OF JUSTIFIABLE RELIANCEAs background to this study, a few brief observations will be provided regarding the roots of promisors' liability for induced justifiable reliance. These early sources found at law and in equity are not presented here necessarily as the direct progenitors of mid-nineteenth century reliance decisions; rather they demonstrate that support for the justifiable reliance impulse did not appear in a vacuum. Reliance hardship relief had been provided for centuries; the early decisional so...See the full content of this document
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