Chapter 3-5 Promissory Estoppel

• Jurisdiction: United States

3-5 Promissory Estoppel

3-5:1 Overview

As a cause of action, promissory estoppel does not create a contract where one does not exist. Rather, a suit for promissory estoppel merely prevents the defendant from strictly enforcing his legal rights regarding the enforceability of promises. As a means of enforcing a contract within the statute of frauds, Promissory Estoppel allows a plaintiff to enforce an otherwise unenforceable promise.

3-5:1.1 Related Causes of Action

Breach of Contract, Assumpsit, Quantum Meruit, Unjust Enrichment

MUST READ CASES

Walker v. Walker, No. 14-16-00357-CV, 2017 Tex. App. LEXIS 2719 (App.—Houston [14th Dist.] Mar. 30, 2017)

English v. Fischer, 660 S.W.2d 521 (Tex. 1983)

3-5:2 Elements

3-5:2.1 As a Cause of Action²⁰²

(1) The defendant makes a promise.²⁰³

• The promise must be sufficiently definite.²⁰⁴
• If the promise is subject to two interpretations (one of which would not be inconsistent with the defendant's position at trial), there can be no estoppel.²⁰⁵

(2) It is foreseeable that the plaintiff will rely upon the promise.²⁰⁶

(3) The plaintiff substantially relies on the promise to his detriment.²⁰⁷

• The plaintiff's reliance must be reasonable.²⁰⁸

3-5:2.2 As a Means of Enforcing a Contract Within the Statute of Frauds²⁰⁹

(1) The defendant promises to sign a writing that would satisfy the Statute of Frauds.²¹⁰

• The defendant may also promise that the agreement falls outside of the Statute of Frauds.²¹¹

(2) The defendant should have expected that his promise would lead the plaintiff to experience a definite and substantial injury.²¹²

(3) Such an injury occurred; and²¹³

(4) The court must enforce the promise to avoid injustice.²¹⁴

3-5:3 Damages and Remedies

3-5:3.1 Reliance Damages

A plaintiff may only recover reliance damages.²¹⁵

Reliance damages are those damages that would put the plaintiff back into the position he would have been but for his reliance on the defendant's promise.²¹⁶

Reliance damages may never include lost profits or benefit-of-the-bargain damages.²¹⁷

A plaintiff may not sue on a theory of promissory estoppel if the promise made was part of a valid and enforceable contract.²¹⁸

3-5:3.2 Enforcement of the Promise

The court may enforce the otherwise unenforceable promise.²¹⁹

3-5:4 Defenses

3-5:4.1 Statute of Limitations

The four-year limitations period applies.²²⁰ The cause of action accrues when the defendant breaches its promise to the plaintiff.²²¹

3-5:4.2 Other Defenses, Generally

Because of the equitable nature of the cause of action, equitable defenses need not be pleaded to be asserted.²²²

Rather, a defendant may put on proof of any fact or defense which might rebalance the equities.²²³

Such equitable defenses could include:

• Unclean hands;²²⁴
• Voluntary payment;²²⁵
• Material change of position;²²⁶ and
• Any facts which tend to negate the essential elements of the plaintiff's claim.²²⁷

Other than limitations, there are no silver bullet defenses. Each equitable defense and fact proven is attributed to the equity of the case.

--------

Notes:

^[202] Henry Schein v. Stromboe, 102 S.W.3d 675, n.25 (Tex. 2002).

^[203] English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983).

^[204] David McDavid Nissan, Inc. v. Subaru of Am., Inc., 10 S.W.3d 56, 74 (Tex. App.—Dallas 1999), aff'd in part, rev'd in part on other grounds, 84 S.W.3d 212 (Tex. 2002).

^[205] Lloyd v. Singleton, 16 S.W.2d 891, 894...