V. The Preexisting Duty Rule

The Basic Concept - Modification without Consideration
I would say hookers and whores would offer the best example of the preexisting duty rule. So say you pick a Whorangatang up
off the corner and ask her how to FUCK. She says, well for you $60. She is not worth $40. So you give her a counter offer of
$25. The broke whore takes it and gets in the backseat with you and just grabs your dick and starts jerkin’ that shit off. You
say, “What the FUCK bitch?!” The whore says, “you need to give me 60 motherfucking dollars to get your dick wet.” Well,
this is a breach. Though you rejected whorebag’s offer, she accepted yours, and it became her duty to FUCK you. Apparently
bitch ass sluts selling themselves don’t prescribe the Restatement Second of Contracts, Section 89 Consideration can’t be
something you are already contracted or bound to do.

What is Underlying the Preexisting Duty Rule?

B. If I enter into an agreement with you to do what I am already supposed to do for an additional
pay.
C. Then what detriment have I suffered? What benefit have I conferred upon?
D. None, I am already supposed to do the things and I am gaining no benefit.
Common Law: If a party does or promises what he is already legally obligated to do, there is no C
 Exception may be when a modification is ‘fair and equitable’ in view of circumstances
not anticipated when K was made.
Restatement (2nd) § 89 Modification Of Executory Contract
- notes exceptions to the common-law rule requiring consideration for modification:
 A promise modifying a duty under a contract not fully performed on either side is
binding
 If the modification is “fair and equitable in view of circumstances not anticipated by the
parties when the contract was made.”
 to the extent provided by Statute
 to avoid injustice when there has been Reliance
 UCC § 2-209(1) ABOLISHES the pre-existing duty rule: An agreement modifying a contract…
needs no consideration to be binding. There must be good faith – it is up to the courts to determine if,
for example, a party was coerced into the modification.
 
Harris v. Watson- apparently your boss can ask you to do your job that he is paying you for
on ship promised workers would pay over wage for seaman to exert themselves to get out of danger.
No good. Seamen had already contracted to do a good job sailing the ship. Consideration can’t be
something you are already contracted or bound to do.
 Under common law, if a party does or promises to do what he is already legally obligated to do
he has not incurred a “detriment” for purposes of consideration. Modification requires
consideration.
 For policy reasons, you are not allowed to hold out for more in an emergency (other is
under duress) when you have a pre-existing duty to deliver services/goods.
Stilk v. Myrick-this is like Zach, as a McDonald’s employee getting fired for smoking the gravity bong during rush
hour and Shandra on the fryer and Karntesha on the drive through ask for his wages for their extra hard work.
on ship. Captain told crew that they would have wages of deserters if they got ship back. No, they
were already obligated to get ship back to port. And consideration can’t be something you are
already bound to do (might be different if they had been at liberty to quit vessel at stop).
 Problem with the preexisting duty rule is that you have an offer and then you have
acceptance. You have the question of consideration and there will be some necessary
performance. The problem is some performance does not stand in for consideration.
Performance of things you are already supposed to do does not count as consideration
because you are not really giving anything up.
Lingenfelder v. Wainwright Brewery Co.-This is like paying a whore $200 to fuck, but this time she
actually hops on your dick, and your loving it, (because your are videotaping it remotely from the closet), but 15 seconds before you give
her the white AIDS, she jumps off your dick, and says “if you want your balls to be less blue, you have to give her an extra $65”. That’s
that bullshit. But you pay her.
Architect who threatened to quite work while building. They agreed to pay him more to get him to
finish. No consideration because he was already under contract to do so. RULE-.when the party
merely does what he is obligated himself to do, he cannot demand an additional compensation
therefore, and although by taking advantage he gets a promise for more, The law will regard it as
nudum pactum and will not lend its process to aid in the wrong. This case gives us the consideration
of the preexisting duty rule on the detriment or benefit rul. The concern is that the preexisting duty
rule creates highway robbery.

Problem 51 (page 190)

When Tony was murdered, Maria offered a $5,000 reward for the arrest of his killer. Officer
Krupke of the New York police force tracked down the killer while Krupke was taking a day
off from work. Maria refused to pay Krupke the reward. Is the preexisting duty rule involved
in this?
Rule: Preexisting duty cannot be consideration for a new bargain.
Issue 1: If a police officer has a preexisting duty to track down criminals, can he get a
reward for doing so?
Issue 2: Does a police officer have a preexisting duty to look for and apprehend
criminals when off duty?
Issue 3: Does a police officer have a preexisting duty to apprehend criminals when off
duty in an emergency?
 
Problem 53 (page 191):
Abby Brewster had wanted to have a cellar under her house for a long time. She hired the
Teddy Construction Company to do the excavation for $1,500. Shortly after the work began, it
was discovered that the house was built over swampland, and the cellar could be dug only with
almost super human effort and great expense. Teddy wanted to quit, but Abby insisted on the
cellar, promising to pay any additional cost. Teddy finally did complete the cellar, but Abby
refused to pay anything more than $1,500. Must she? If it is clear from the usage of trade that
in this situation the contractor bears the risk of soil problems, how is this result squared with
the preexisting duty rule? If this were a sale of goods instead of construction agreement, is the
answer easier? See UCC § 2-209(1) and its Official Comment 2.
 This agreement was held to be enforceable. The court said: ''Whether ... the original contract
could have been set aside in equity on the principle of mutual mistake need not be inquired,
because both parties acted upon the theory that there had been such mistake and that hence as
matter of fair dealing the original contract ought to be modified and a new agreement made to
govern their relations.
 UCC § 2-209(1) provides:
(1) An agreement modifying a contract within this Article needs no consideration
to be binding.
 The basic idea of the UCC § 2209(1) is that: you do not need consideration to modify an
agreement
 
Problem 54: Army v. Tank Treads, Inc.
 2-209 This was not a good faith modification or recision. 1-203 Obligation of Good Faith. Treads did not act
in good faith, taking advantage of Army’s plight.
1-207 Reservation of rights (Army gave in “under protest”) preserving rights to sue later
 
§ 279. Substituted Contract: So now you got the whorangatang home to your wife’s bed, where ya’ll
made your child, and you rip all her clothes off, and she’s got that lil cotton string hangin’ out of her vaj. As she goes to take it out so
you can raft the Red River, You come to my senses, and say “I know I gave you $50 to fuck me, but why don’t you just give me a Red
hot BJ and slobber on my balls a lil bit?” She says ok, and commits. That’s a substitute contract.
(1) A substituted contract is a contract that is itself accepted by the obligee in satisfaction of the obligor's
existing duty.
(2) The substituted contract discharges the original duty and breach of the substituted contract by the obligor
does not give the obligee a right to enforce the original duty.
Examples: Michael Jordon, Tyrell Owens, Barry Sanders - How can you exceed performance and during the
first year of a 5 year contract demand a new contract?
 
How to get around the PED
1. Rescind old K and enter into a new K (in the same document)
2. Restructure or rewrite the K, and promise something new
old: $1 M for 3 years new: $10 M for 5 years (You’ve added something new on both sides)
 
§ 73. Performance Of Legal Duty
Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest
dispute is not consideration; but a similar performance is consideration if it differs from what was
required by the duty in a way which reflects more than a pretense of bargain.
 
Corbin on Contracts: § 7.18 Compositions With Creditors - Part payment by a debtor of an already
overdue debt is generally held not operative as a full satisfaction, even though the creditor so agrees, and it is
not consideration for a promise.

PAST DUE MONETARY DEBTS

 
Accord and Satisfaction
If there is either a good faith dispute about whether there is any debt owed or the amount of debt
owed, an agreement to pay less than requested by the creditor is supported by consideration.
An Accord is the agreement to accept a substituted or different performance: (Settling for Red Hot BJ
instead of Red River Rafting)
Satisfaction is the execution of the new agreement. (Pornstar BJ- all over her face and on youtube that night)
 Accord: An agreement whereby one party agrees to give and the other party agrees to accept
something other than that originally agreed to. (Having sex, and you slip it in her butt….and she likes
it)
 Satisfaction: The carrying out of the accord (Just the tip)

 Obligee – one to whom an obligation is owed

 Obligor – one who owes an obligation

 General rule: Where you have a disputed debt, the debtor does not have to pay anything until the debt
is legally resolved.
 Accord and satisfaction; an agreement to substitute a different agreement. And satisfaction is
the performance of accord. Must start with a genuine dispute.
 An executory accord is a bilateral contract.
 An executory accord is defined in 6 Corbin on Contracts § 1268 as follows:
 The term “accord executory” is and always has been used to mean an agreement for the
future discharge of an existing claim by a substituted performance. In order for an
agreement to fall within this definition, it is the promised performance that is to
discharge the existing claim, and not the promise to render such performance.
Conversely, all agreements for a future discharge by a substituted performance are
accords executory. It makes no difference whether or not the existing claim is liquidated
or un-liquidated, undisputed or disputed, except as these facts bear upon the sufficiency
of the consideration for some promise in the new agreement. It makes no difference
whether or not a suit has already been brought to enforce the original claim; or whether
that claim arises out of an alleged tort or contract or quasi-contract.
Problem 58
 Problem 58a: By agreeing to forbear from legal right (Restatement section 71(3)(b) a forbearance is
consideration) and pay the $750 as full satisfaction (both promises of which have legal value and were
bargained 4. This is a valid accord and her payment will be the satisfaction.
 Problem 58b: If Pecunious violates and files bankruptcy anyway claim for $1000 or $750? See
Restatement of Contracts section 417c on pg. 186 of casebook “If the debtor breaks such a contract
the creditor has alternative rights. He can enforce either the original duty or the subsequent contract”
 
Clark v. Elza
 car accident suit. Parties verbally agreed on a figure for settlement. Then one party backed out.
Said it was merely executory accord and could only be enforced upon satisfaction
(performance). However a Substituted contract would be binding. Here intent was to make
executive accord. So rights not waived. Unless clear evidence to contrary an agreement to
discharge a pre-existing claim will be regarded as executory accord.
 Holding: it is logical to hold that executory accords are enforceable. An executory accord is
simply a type of bilateral contract. As long as the basic requirements to form a contract (offer,
acceptance, and consideration) are present, there is no reason to treat such a settlement
agreement different than other contracts which are binding.
 An executory accord is a bilateral contract.
 So because it is a bilateral contract we know that an executory accord needs offer,
acceptance, and consideration.
 If there is not an offer, acceptance, and consideration then it is not an executory accord.
 Executed contract: has been completed
 Executory contract: has not been completed but it is enforceable
 When does a signature matter?
 In a firm offer it can matter and when the offer says signature is a manifestation of assent
necessary
 The UCC defines signature: any mark or symbol executed or adopted by a party
to with the present intention of authenticating a writing
 A signature is evidence of manifestation of assent but it is not required unless it is
required by rule of law or rule of the contract
 

Promissory Estoppel
 If someone makes a promise on which there is forseeable reliance, that person is forbidden from
brining up many traditional defenses to the enforcement of the promise (No consideration, no
acceptance, no written)
(Not exactly, but Essentially like you telling a bitch you fucked last week that you promise you have THE AIDS, and promising she now has it, and
so now she kills herself/spends thousands on testing(though probably free). You knew your promise would induce action, and it did, though equity
can’t truly be reached by enforcing the promise….unless the bitch wants THE AIDS, and you got em’.)
Contracts Law Concerns Itself with 4 Types of “Binding Obligations”
 Gift – promise to confer property to another - Sometimes gifts are binding and sometimes
they are not
 Contract – promise plus bargain for exchange
 Promissory estoppel – promise plus detrimental reliance
 Restitution – No promise but confers a benefit
Gifts - A promise of a gift is unenforceable as a gift.
 Inter vivos gifts - There is no requirement for consideration in order for something to be
an inter vivos gift.
 Elements of a inter vivos gift (Intend to stick your dick in, she accepts your dick in, and
you deliver your gift inside her)
1. The donor’s intention to make a present transfer
2. Actual or constructive delivery of the gift to the donee, and
3. Acceptance by the donee.
i. Note: There is no consideration (for example, no bargain for
exchange).
 Complete and enforceable when all 3 elements are met!
In essence, the donee has title to the gifted property.
Charitable subscriptions – is a gift but when we try to enforce it, we look for consideration or reliance.
 Elements of a charitable subscription
 (I promise to donate my dick to the charity of your ugly face)
 An oral or written promise
 To do certain acts Or to give real or personal property
 To a charity Or for a charitable purpose.
 Note: For formation purposes there is no consideration (for example, no bargain
for exchange).
 Enforceable when…
. Promise
. To give property
. To a charitable institution
. Promise to supported by
. Consideration or
. Reliance.
There is no consideration for something to be a charitable subscription.
Consideration (and reliance) only come into play when the court (because of public
policy in favor of charitable giving) chooses to enforce a charitable subscription.
 
2 Way to Define Common Law Contracts
 MBEC version
 Manifestation of mutual assent
 To a bargain
 In exchange and
 Consideration
 OAC version
 Offer
  Acceptance
 Consideration
 If you have actually proven the OAC version then you have also actually proven the
MBEC version as well.
We have already learned the OAC version
 The key to both forms of contract is: consideration (meaning bargain for exchange!)
 
Other Law of Contract Formation
 Uniform Commercial Code - Conduct sufficient to show the existence of a contract. UCC
§ 2-207(3). See below.
 UN Convention on the Sale of Goods (CISG) = Offer + Acceptance
  
Other Laws Of Contract Formation
Neither CISG nor the UCC require consideration!
They therefore move away from the “traditional” (common law) approach to contract
formation.
  
Binding Obligations
For a promissory estoppel you must prove the following elements exist…
1. There is a promise
1a. The definition for promise is needed here
2. Which the promisor should reasonably expect to induce action or forbearance on the part
of the promisee.
2a. Action
2b. Forbearnace
3. Induces such action or forbearance
4. Injustice can be avoided only by enforcement of the promise
 
Allegheny College v. National Chautauqua County Bank (1927, pg 189)
1. Reminder: Decedent promised to donate $ for a scholarship to be named in her honor
2. Rule: The implied promise to name the scholarship after decedent when the initial $1000 was
accepted was sufficient consideration to support the promise to give the donation and make this
an enforceable bilateral contract.
3. The concept of promissory estoppel is introduced as the equivalent of consideration in connection
with laws of charitable subscription, though it is not used to support this case, which is decided
using normal consideration doctrine.
 Was attempting to show the then-prevalent definition of consideration was broad enough to
encompass the kind of "consideration" given here and, as a result, there was no need to expand
the law.
 Rules:1. Charitable subscriptions are unenforceable absent consideration.
2. Consideration must suffer detriment or incur benefit.
3. The promise must be motivated by the consideration given by the other person
(inducement).
4. Promissory estoppel can stand in for consideration in charitable subscription
cases.
5. “Adequacy” of consideration is not relevant to inquiry as to whether something is
consideration.
 Interlocutory promise – pledge of donation of certain amount of money in exchange and
dependant upon another donor being identified that will give a like amount. If you cannot find
other donor, then you are not required to give the pledged amount.
 
Promissory (or Equitable) Estoppel – theory for protecting unbargained-for reliance (no consideration)
 Promissory estoppel is classically used in cases involving GRATUITOUS PROMISES
1. Allows certain contracts to be enforced even without consideration
2. There needs to be REASONABLE RELIANCE on the promise
3. Available remedy is different than under a contract: Generally RELIANCE damages
a. Cannot be more that the difference of the value of having the promise enforced
versus not enforced. Can, however, be less than this difference.
 
§90 Restatement of Contracts (original, not second)
§90. Promise Reasonably Inducing Definite and Substantial Reliance
A promise which the promisor should reasonably expect to induce action or forbearance of a
definite substantial character on the part of the promisee and which does induce such action or
forbearance is binding if injustice can be avoided by enforcement of the promise.
 
§90RESTATEMENT (SECOND) OF CONTRACTS
§90. Promise Reasonably Inducing Action or Forbearance
1. A promise which the P/r should reasonably expect to induce action or forbearance on the part of
the P/e or a 3rd person and which DOES induce such an action or forbearance is binding in
injustice can be avoided only by enforcement of the promise. The remedy granted for breach
may be limited as justice requires.
2. A Charitable Subscription or Marriage Settlement is binding under Subsection (1) without proof
that the promise induced action or forbearance.
 Need to actually induce action or forbearance, and need proof of it, unless it is a Charitable subscription
or a Marriage Settlement, then no proof is required.
 
 Comparing the first and second Restatement versions of § 90, both require that
1. there must be a promise,
2. the promisor must reasonably expect (foresee) that the promise will induce reliance,
3. there must be actual reliance by the promisee, and
4. injustice can be avoided only by enforcing the promise.
The Second Restatement version makes three additions:
 a relying third party may enforce the promise;3

 a flexible remedy standard is created by authorizing that the remedy "may be limited as justice
requires;" and,
 charitable subscriptions and marriage settlements are binding without proof of reliance.
 

Problem 61 (page 207):

When Earnest was about to turn 40, he became very depressed. To cheer him up, his rich
Aunt Augusta told him that she was going to give him $1,000 for each year of his life as
a birthday gift. Overjoyed, Earnest lived it up in the month before his birthday. He spent
his savings on a new car, a wild day at the races, and a hot air balloon. When his Aunt
Augusta learned this, she became disgusted at his profligacy and for his birthday she sent
him a simple birthday card. He calls your office for advice. Does he have an action
against her?
This is not a completed gift because it fails to meet the element of delivery. This is
a promise of a gift. There was no actual or constructive delivery.
Consideration: Incurring a detriment or giving a benefit
There is past consideration and moral consideration.
Has Earnest incurred a loss?
 Was a contract formed?
No, there is not facts to meet offer, acceptance, and consideration here.
When the elements of a promissory estoppel are met then you are stopped from
revoking your promise.
Based on the promise from Aunt Augusta would a reasonable person be
induced to take the kind of action that Earnest took.
The promise did induce Earnest to act, BUT should it have induced
him?
 
Agency
Roughly speaking, an “agent” is a person authorized to act on behalf of another person
called the “principal”
There are 2 ways an agency can have authority:
1. Apparent authority
2. Actual authority
A. Apparent authority: is the power held by an agent or other actor to affect a
principal’s legal relations with third parties when a third party reasonably believes the
actor has authority to act on behalf of the principal and that belief is traceable to the
principal’s manifestations.
Elements broken down:
Apparent authority arises when
A. A third party
B. Reasonably believes
C. The actor (the “agent”)
D. Has authority to act on behalf of the principal
E. And that belief is traceable to the principal’s manifestations.
B. Actual authority: an agent acts with actual authority, when at the time of taking
action that has legal consequences for the principal, the agent reasonably believes, in
accordance with the principal’s manifestations to the agent, that the principal wishes the
agent so to act.
Elements broken down:
Actual authority arises when
At the time of taking action that has legal consequences for the principal,
The agent
1. Reasonably believes,
2. In accordance with the principal’s manifestations to the agent,
3. That the principal wishes the agent so to act.
 
Universal computer systems v. medical services association of Pennsylvania.
a. Reminder: Universal relied on Blue Shield’s promise to pck up it’s bid a the airport in order to
make it in time under the deadline. Blue Shield didn’t go, and Universal lost bid.
b. Rule: Universal reasonably relied (and acted on its reliance) on Blue Shield’s promise to its
detriment and can be compensated under promissory estoppel. Yet, expectation damages were
awarded, not reliance damages.
c. Rule 1: Apparent authority is the power to bind a principal in the absence of actual
authorization from the principal, but under circumstances in which the principal leads
persons with whom his agent deals to believe the agent has authority.
d. Rule 2: An agent possesses apparent authority if a man of ordinary prudence, diligence,
and discretion would have a right to believe and would actually believe that the agent
possessed the authority he purported to exercise.
 e. Rule 3: A principal is not bound by the unauthorized acts of the agent if the third person
had notice of the agent’s lack of authority
f. In promissory estoppel cases, damages are only just what you =spent in reliance (or lost).
No more. Also doesn’t make agreement a contract. Only makes it an enforceable
promise.

Damages Introduced
 Sometimes the words “damages,” “damage,” and “injury” are used synonymously.
. This can be a mistake as the words do have different meanings!
. Injury: is the illegal invasion of a legal right
. Damage: is the loss, hurt, or harm that results from the injury, and
. Damages: are the compensation awarded for the damage suffered.
. Why does a person get damages when they suffered a legally compensable injury?
L.L. Fuller and William R. Perdue, Jr., The Reliance Interest in Contract Damages:
1, 46 YALE L. J. 52 (1935).
Identified three interests a plaintiff might have that would support given that
plaintiff damages and for finding the defendant liable under contracts law:
. The restitution interest preventing unjust enrichment,
. The reliance interest undoing the harm arising from the plaintiff’s reliance
on the defendant’s promise, and
. The expectation interest placing “the plaintiff in as good a position as he
would have occupied had the defendant performed his promise.”
 
 

 
 
James Baird Co. v. Gimbel Bros., Inc. (page 215)
contractors and subs. Subs sent out offer to contractors to sell tile at…price. Then sent back
revoke, after contractor relied to make bid. Both parties must be bound to contract or none. In
this case, contractor wasn’t bound to use that sub (if later he found a cheaper price) so sub
wasn’t bound to him.
Issue: Was the offer withdrawn before it was accepted? (Yes)
 Rule: An offer for an exchange is not meant to become a promise until a consideration has
been received, either a counter-promise or whatever else is stipulated.
The basic idea is that: You can revoke your offer before it is accepted.
Application:
1. There is no donative promise here.
2. Instead there is an offer for an exchange.
3. The offer was to sell linoleum in exchange for the plaintiff’s acceptance, not his
bid.
4. The offer could be accepted only when the acceptance was given – for example:
the promise to pay the price.
5. The offer was rejected before there could be/was acceptance.
6. Overruled: Note that this case has been overruled by subsequent precedent as our
next case demonstrates.
 Reminder: Subcontractor submits a low bid based on a miscalculation of the job’s
specifications. In reliance on that bid, Contractor submits low general bid that is ultimately
accepted. Prior to any communication between the Contractor and Subcontractor, the latter
withdraws its bid.
 Rule: Unless there is evidence demonstrating that the parties intended to be bound by a
conditional contract, no contract is formed if the offer is withdrawn before it is accepted.
Likewise, no room for promissory estoppel because this was an offer for an exchange, not yet a
promise since their was no acceptance.
 Note: The court holds that there was no evidence to indicate that using the bid in the general bid
was acceptance, though it may be general practice in the business.
 

Branco Enterprises v. delta roofing

sub contract said ok we’ll do it we understand conditions. Then later said wouldn’t couldn’t
get certification. Here there was elements of estoppel, because condition was clear, it was clear
they were relying on it. why valid? Difference from last case; contractor actually called to
confirm and bind himself to subcontractor. It was conditional offer. That is ok.
a. Reminder: Contractor asked for bids on the installation of a roof for a renovation project, roof
had to use a particular product and roofer had to be certified to install this product. Defendant
won bid, was aware of reqs, but breached because they did not get certification.
b. Rule: Contract was found, and the contractor was entitled to damages based on the doctrine of
promissory estoppel because there was a promise to perform, foreseeable and actual reliance by
the contractor, and injustice absent enforcement because the contractor had to obtain a new
subcontractor for the roof at a higher price.
c. Note: Weird!! Why reach promissory estoppel if a contract was found with offer and acceptance?
Awarded expectation (contract), not reliance damages. Exemplifies problem in confusing
promissory estoppel and contract (difference in damages).
d. From the Restatements of Chelsey: "I don’t want to spend a lot of time on this, just point
out that it shows that Baird is no longer good law and discuss subcontractor law."
 
Hoffman v. Red Owl Stores (1965, pg 212)
a. Reminder: Man really wants this grocery store franchise, and sells his bakery, small grocery
store, and home without having a formal contract (“agreement was never reached on factors
essential to the contract”).
b. Rule: A promise too indefinite to be an offer may be a promise enforceable under promissory
estoppel. Contentious idea – how can there be a promise where there is no contract? If you can
find a promise, why not a contract? Outside of gratuitous promises, it is easier to analyze case &
whether there was reliance under contract principles.
 c. Note on damages: Only out-of-pocket, or reliance damages, can be recovered under promissory
estoppel. Sometimes, when expectation damages are too difficult to determine, court will award
reliance damages.
 3 issues in this case:
1. Should the court adopt an action called promissory estoppel based on
Restatement 1 of Contracts § 90?
Prior to this case, promissory estoppel was not used as a cause of action. So, how
does the court decide that it should adopt an action of promissory estoppel?
How does the court justify adding promissory estoppel to this jurisdiction?
Since there is an injustice happening here, we believe there should be a
remedy, and because there is no remedy we should make one.
“As Mr. Justice McFaddin, speaking in behalf of the Arkansas court,
well states, that the development of the law of promissory estoppel “is
an attempt by the courts to keep remedies abreast of increased moral
consciousness of honestly and fair representations in all business
dealings.”
“Because we deem the doctrine of promissory estoppel, as stated in
section 90 of Restatement, 1 Contracts, is one which supplies a needed
tool which courts may employ in a proper case to prevent injustice, we
endorse and adopt it.”
2. Do the facts support a promissory estoppel cause of action?
Before we begin our fact analysis, we should define promissory estoppel by
breaking it into its 4 elements and then plug the relevant facts into each part…
1. There is a promise
The basic promise here is that for $18,000 Hoffman gets a Red Owl
Store.
Also, If you sell your bakery then you get a Red Owl Store.
Next, If you buy the lot then you get a Red Owl Store.
And, There is a promise regarding the $24,100.
Also, There is a promise regarding the $26,000.
And, If you move then you get the Red Owl Store.
Finally, Red Owl Stores promised a timeline to Hoffman.
Utilize the promise rule and determine if each of the above really
are promises.
2. The promisor should reasonably expect the promise to induce action or
forbearance, which is definite and substantial, of the promisee
A large number of promises = assurance of performance.
A reasonable person upon hearing these promises would act.
3. It does induce such action or forbearance
Hoffman sold the bakery, sold the grocery store, rented a house,
gathered the money, etc.
Not all reliance will count and not all detriments are sufficient.
4. If injustice can be avoided only by enforcement.
3. What damages are proper in a promissory estoppel cause of action?
Promissory estoppel is in part brought in when there is not consideration.
The amount of injury which Hoffman suffered falls into relevance here.
In general, expectation damages are more than reliance damages.
This means you want breach of contract to be your cause of action first, and if that is not
valid then promissory estoppel.
The court concludes that injustice would result here if plaintiff were not granted some relief
because of the failure of defendants to keep their promises, which induced plaintiffs to act to
their detriment.
 Hoffman relied, the defendants induced.
“Enforcement of a promise does not necessarily mean Specific Performance… The amount
allowed as Damages may be determined by the plaintiff’s expenditures or change of
position…The wrong is not primarily in depriving the plaintiff of the promised reward but in
causing the plaintiff to change position to his detriment.”
Specific performance: making them do what they said they would do
Enforcement of a promise is not just specific performance!
You are being compensated for the change in your position, where that change can be
understood as a harm or detriment to you.
Which damages does Hoffman get to keep and not keep?
Hoffman does not get to keep the lost profits from the sale of the grocery store. That is
forward looking and not backward looking, so Hoffman cannot get his lost profits.