Chapter 18 - § 18.7 • PROMISSORY ESTOPPEL

• Jurisdiction: Colorado

§ 18.7 • PROMISSORY ESTOPPEL

In the area of construction litigation, promissory estoppel is most frequently seen in the bidding context, although proceeding on that theory has also been attempted in several other instances. Generally, all attempts have been unsuccessful. The doctrine of promissory estoppel is as follows:

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.¹⁰⁴

Promissory estoppel "was developed by equity to enforce, in appropriate circumstances, a unilateral promise for which no consideration was provided."¹⁰⁵ A promise binding based on promissory estoppel is a contract, and breach of the promise can be enforced by the means express contracts are enforced.¹⁰⁶ Promissory estoppel differs from equitable estoppel inasmuch as equitable estoppel applies to misstatements of fact while promissory estoppel applies to promises.¹⁰⁷

Promissory estoppel "is applicable only in the absence of an otherwise enforceable contract" and should not be considered when parties have mutually agreed on all essential terms of a contract.¹⁰⁸ For this reason, a promissory estoppel claim by a subcontractor for the costs of acceleration and changes, which contingencies were covered by the existing subcontract, was unsuccessful.¹⁰⁹

General contractors and subcontractors alike have failed when contending that the doctrine of promissory estoppel applied to certain bid activities. In L&M Enterprises, Inc. v. City of Golden¹¹⁰ the plaintiff contractor submitted a bid on a public works project. Although it was the low bidder, the contract was awarded to the second lowest bidder.¹¹¹ The contractor sued Golden. One claim it asserted was for promissory estoppel based upon the competitive bid statute found at C.R.S. § 31-15-712. That claim was dismissed, as were the other claims.¹¹² The dismissal of the promissory estoppel claim was affirmed since the contractor, as a disappointed bidder, did not have standing to assert a violation of the competitive bid statute.¹¹³ Nor could the contractor recover from the city for "interference with the formation of a contract."¹¹⁴ While Colorado recognizes claims for tortious interference with contract, such claims are against third parties, not the party with whom the contract was sought.¹¹⁵ A similar result, although on different grounds...