Vondran Legal® Contracts College - Promissory Estoppel Crash course by Attorney Steve®.  To discuss potential representation, call us at (877) 276-5084.

Introduction

Click to watch a basic introduction crash course on Promissory Estoppel by Attorney Steve® Vondran.

What a Plaintiff must show to succeed in a Promissory Estoppel Cause of Action

Promissory Estoppel Four Main Elements

What elements are required for the promissory? The elements of a promissory estoppel lawsuit are:

1. A clear and unambiguous promise communicated to the Offeree-Plaintiff
   
   
2. Detrimental reliance by the Plaintiff
   
   
3. The reliance must be both objectively reasonable and foreseeable
   
   and
   
   
4. Unconscionable detriment/injury suffered by Plaintiff.

Promissory estoppel applies whenever a promise which the promissor 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' would result in an `injustice' if the promise were not enforced.  A party plaintiff's misguided belief or guileless action in relying on a statement on which no reasonable person would rely is not justifiable reliance. If the conduct of the plaintiff in light of his own intelligence and information was manifestly unreasonable, he will be denied a recovery.

See Granadino v. Wells Fargo Bank, N.A. (2015), 236 Cal. App. 4th 411.

California Case Law

• Promissory estoppel elements overview

The elements of a promissory estoppel claim are: (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance." See Aceves v. U.S. Bank, N.A., 192 Cal.App.4th 218

• Preliminary negotiations and vague and ambiguous promises are not enforceable

The promise must, in addition, be `clear and unambiguous in its terms. Estoppel cannot be established from ... preliminary discussions and negotiations.'" (Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1044 [107 Cal.Rptr.3d 683].)

• There must be actual reliance

The promisee must have actually relied on the promise.  See Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150.)

• The reliance on the promise must be both reasonable and foreseeable

The promisee's reliance on the promise must be both reasonable and foreseeable.  US Ecology, Inc. v. State of California(2005) 129 Cal.App.4th 887.  "Promissory estoppel was developed to do rough justice when a party lacking contractual protection relied on another's promise to its detriment." 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

• Actions against a state government 

“No contractual or promissory estoppel "liability may be assessed against [a state agency]" if the contract or promises were not "statutorily or constitutionally authorized”  US Ecology, Inc. v. State of California(2005) 129 Cal.App.4th 887.

• Intent to induce reasonable reliance

The element of reasonable and foreseeable reliance is satisfied if the promisor, in making the promise, deliberately intended to induce the plaintiff's reliance on such promise. See Emma Corp. v. Inglewood Unified Sch. Dist. (2004) 114 Cal.App.4th 1018.

• The presence of sophisticated parties may alter the outcome, especially for preliminary negotiations

Where the promisees were experienced business persons and the promisor made nothing more than a conditional offer with essential details missing, the promisees could not legitimately have expected that there was a binding offer and could not reasonably have relied on it. See Laks v. Coast Fed. Sav. & Loan Ass’n  (1976) 60 Cal.App.3d 885.  Appellants' claim of promissory estoppel is based on Restatement of Contracts, section 90, and the cases of Drennan v. Star Paving Co., 51 Cal.2d 409 [333 P.2d 757]; Aronowicz v. Nalley's, Inc., 30 Cal. App.3d 27 [106 Cal. Rptr. 424]; Saliba-Kringlen Corp. v. Allen Engineering Co., 15 Cal. App.3d 95 [92 Cal. Rptr. 799]; Norcross v. Winters, 209 Cal. App.2d 207 [25 Cal. Rptr. 821]; Anchor Cas. Co. v. Surety Bond Sav. & Loan Assn., 204 Cal. App.2d 175 [22 Cal. Rptr. 278]; Wade v. Markwell & Co., 890*890 118 Cal. App.2d 410 [258 P.2d 497, 37 A.L.R.2d 1363]; and Morrison v. Home Savings & Loan Assn., 175 Cal. App.2d 765 [346 P.2d 917].  

Coast did not make a clear and unambiguous offer. In the initial paragraph of the letter, it states it is a conditional commitment.  Other essentials are absent, namely, payment schedules for each loan, identification of the security, prepayment conditions, terms for interest calculations, loan disbursement procedures, and rights and remedies of the parties in case of default. None of these, standing alone, would necessarily make the offer conditional if missing. However, the fact that so many important conditions are absent, further emphasizes the conditional nature of the letter and strengthens the argument that the parties were still in the negotiation stage.

• There must be a real injury (detrimental change in position)

The party asserting the estoppel must be injured by his reliance on the promise. See Jones v. Wachovia Bank(2014) 230 Cal.App.4th 935.  The vital principle is that he, who by his language or conduct, leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted. Courts are given wide discretion in its application.

• Relation to statute of frauds

To estop a defendant from asserting the statute of frauds, a plaintiff must show unconscionable injury or unjust enrichment if the promise is not enforced.)  The doctrine of estoppel has been applied where an unconscionable injury would result from denying enforcement after one party has been induced to make a serious change of position in reliance on the contract or where unjust enrichment would result if a party who has received the benefits of the other's performance were allowed to invoke the statute.  See Estate of Baglione (1966) 65 Cal.2d 192, 197 [53 Cal.Rptr. 139, 417 P.2d 683].  "Strict adherence to the statute of frauds has been abandoned in favor of certain limited exceptions to promote equity and fair dealing between parties.  (See Allied Grape case below).  Promissory estoppel might serve as exception to the California statute of frauds where a Plaintiff-promisee can show detrimental reliance and unconscionable injury. See Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935. above.

• Plaintiff must show injustice will result if the promise is not enforced

An oral promise that meets the elements of promissory estoppel is enforceable if injustice can be avoided only by enforcement of the promise. See Allied Grape Growers v. Bronco Wine Co.(1988) 203 Cal.App.3d 432.  

• Damages recoverable under promissory Estoppel

A trial court's damage award on a promissory estoppel claim must not be speculative, remote, contingent, or merely possible. Granadino v. Wells Fargo Bank, N.A. (2015) 236 Cal.App.4th 411.).  See link above.

• No right to a jury trial

A jury trial is not available to plaintiffs whose cause of action is based on the equitable doctrine of promissory estoppel. A-C Co. v. Security Pacific Nat. Bank (1985) 173 Cal.App.3d 462.). Since there was not a contract to extend the notes because the trial court found as a matter of law there was no consideration, plaintiffs' only possibility of establishing an enforceable promise to keep open the alleged offer to extend was by way of the equitable doctrine of promissory estoppel. It was specifically the claim of a promise enforceable by the doctrine of promissory estoppel that plaintiff was asserting and that the court submitted to the jury for decision. This case is directly controlled by the decision of the California Supreme Court in C & K Engineering Contractors & Amber Steel Co. There, the court held that where "plaintiff's suit for damages for breach of contract was based entirely upon the equitable doctrine of promissory estoppel [citation], the gist of the action must be deemed equitable in nature and, under well established principles, neither party was entitled to a jury trial as a matter of right.

• Statute of limitations

The statute of limitation for promissory estoppel in California based on an oral promise is two years. Cal. Civ. Proc. Code § 339(1).  "An action upon a contract, obligation or liability not founded upon an instrument of writing."

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