40 Promissory Estoppel

• Library: Elements of Civil Causes of Action (SCBar) (2015 Ed.)

40 Promissory Estoppel

A. Definition

The law of promissory estoppel is not well developed in South Carolina. Until 1981 the Supreme Court of South Carolina had not even used the term, although it has acknowledged applying the doctrine as early as 1922.¹ Promissory estoppel is a substitute for, or an equivalent of consideration. The doctrine is based not on contract with a substitute for consideration, but on general principles of estoppel. It is said to be "equitable in nature."²Where a contract exists, promissory estoppel is inapplicable.³ Contract and estoppel are "two different creatures of the law."⁴ The court has said promissory estoppel applies where a refusal to enforce a promise "would be virtually to sanction fraud or would result in other injustice."⁵

B. Elements

(1) a promise unambiguous in its terms
(2) reasonable reliance on the promise by the party to whom it is made
(3) the reliance is expected and foreseeable by the party who made the promise
(4) injury in reliance on the promise.⁶

C. Elements Defined

1. A Promise Unambiguous in Its Terms

The plaintiff must plead and produce evidence of an unambiguous promise.⁷ Vague remarks about job security, for example have been held not to constitute an unambiguous promise.⁸ Where an employee of the defendant offered the plaintiff a position as a blind licensed vendor at a state correctional institution, the fact that the defendant mailed the plaintiff a copy of an unsigned contract between itself and the correctional institution more than two months after the promise of employment did not render the promise ambiguous.⁹Where promissory estoppel is raised when real property is claimed, the burden of proof is clear and convincing evidence.¹⁰

2. Reasonable Reliance on the Promise by the Party to Whom It Is Made

Any reliance must be reasonable to meet the second element.¹¹ Reliance has been said to mean that the plaintiff is induced into a definite and substantial detrimental action or forbearance.¹² Reliance on a representation is unreasonable when there are written terms and conditions expressly disclaiming the alleged promise.¹³ Where, for example, a general contractor submits a bid in reliance on a subcontractor's bid the court said "we cannot say ... that as a matter of law [that the plaintiff's] reliance on [the defendant's] bid in preparing its own bid was unreasonable ...".¹⁴

The South Carolina Commission for the Blind promised a person holding its vending license employment at a new location. The Commission's regulations prohibited a licensee from operating more than one vending location at a time. Thus, when the Commission offered the licensee a new location, he had to choose between accepting the offer or continuing to work at his existing location. He relinquished the job at his existing location in reliance on the promise of employment at a new location. The court found the reliance was reasonable because the Commission had the sole authority to hire vendors and it would be "reasonable for a would-be employee to rely on a promise of future employment from the only entity with the power to hire him."¹⁵ In another case, teachers claimed reasonable reliance on a school superintendent's promise of a raise if they obtained national board certification. The court said that since the superintendent informed the teachers on several occasions that the incentive was subject to the approval by the School Board, it was unreasonable for them to rely on the superintendent's statement that they would receive a specified salary increase if they became national board certified.¹⁶

3. The Reliance Is Expected and Foreseeable by the Party Who Made the Promise

The plaintiff must plead and prove that his or her reliance was expected and foreseeable by the defendant. An allegation that the defendant knew the plaintiff would rely on the defendant's promise was sufficient to overrule a demurrer.¹⁷ And where a general contractor prepared and submitted a prime bid in reliance on a subcontractor's bid it cannot be said that the former's reliance was unexpected or unforeseeable by the latter, despite the fact that the defendant's bid was less than half the other subcontractor bids.¹⁸ Where the South Carolina Commission for the Blind promised a person holding its vending license employment at a new location and its own rules prevented a licensee from holding more than one vending position at a time, the Commission could have both expected and foreseen that the licensee would relinquish the job he held at the time of the promise in reliance on that promise.¹⁹

4. Injury in Reliance on the Promise

Without injury, there is no cause of action for promissory estoppel.²⁰ Where a bank erroneously represented to a warehouse that it had a lien on the crops grown on a particular farm, and the warehouse promised to make the bank joint payee on all checks issued for crops sold, the bank suffered no injustice when the warehouse failed to perform its promise.²¹ In another case, an employee of the defendant offered the plaintiff a position as a blind licensed vendor at a state correctional institution. The plaintiff quit his existing position in reliance on that promise, but the new job never became available. The plaintiff met the first three elements of an action for promissory estoppel, but failed to demonstrate that he suffered injury in reliance on the promise because the position he quit was eliminated only days later. Thus, even assuming the plaintiff quit his job in reliance on the promise, said the court, he could no longer have worked at his previous job. Since that job was no longer available following his resignation, he failed to demonstrate he sustained injury by quitting his job in reliance on the promise of another position.²²

D. Defenses

While contract and promissory estoppel are considered distinct causes of action,²³ the Restatement provides that a promise binding under principles of promissory estoppel is a contract.²⁴ Defenses to a contract action therefore may be applicable. Some of the defenses in an action for breach of contract include the statute of limitations, minority, a contract in contravention of public policy, impossibility of performance, lack of contractual capacity,²⁵and duress.²⁶

The statute of limitations applicable to actions on a "contract, obligation, or liability, express or implied" is three years for actions arising on or after April 5, 1988, and six years for those arising before that date.²⁷ However, the South Carolina Supreme Court has held that the statute of limitations does not apply to actions in equity,²⁸ and promissory estoppel is said to be "equitable in nature."²⁹ On the other hand, equitable causes of action may be barred as untimely under the doctrine of laches.³⁰

A minor may disaffirm a contract as a whole, but may not affirm beneficial terms and disavow burdensome ones.³¹

Courts will not enforce a contract that violates public policy, statutory law, or constitutional provisions.³² Thus, a contract which contravenes public policy is void and cannot be the basis of an action for breach.³³ Similarly, courts will not enforce an illegal transaction, although an independent contract, not forbidden by law is enforceable despite the fact it is connected to proceeds of an illegal transaction.³⁴

A party to a contract is excused from performance which is rendered impossible by an act of God, the law, or by a third party. The party claiming impossibility bears the burden of proving it as a defense, and impossibility must be real, not mere inconvenience.³⁵

E. Remedies

The Restatement provides that, since a contract is formed where the elements of promissory estoppel exist, normal remedies for breach of promise are available.³⁶ However, it has also been said that there should be flexibility³⁷ in the remedies invoked, and relief may be limited to restitution or reliance damages.³⁸ In Blanton Enterprises v. Burger King Corporation,³⁹the court said neither lost profits⁴⁰ nor punitive damages⁴¹ could be recovered under promissory estoppel, but...