Promissory estoppel is a legal principle that allows a party to enforce a promise made by another party even if there was no formal agreement or contract between them. It is often used in situations where there is no formal contract, but one party makes a promise to another party, and the other party relies on that promise to their detriment. To establish promissory estoppel, the following elements must be present:
Legal relationship: There exists some form of legal relationship. A contractual relationship is the most common type of legal relationship. Parties to pre-contractual negotiations also fall within this principle.
Promise: One party makes a clear and unambiguous promise that leads the other party to assume that the promise will be performed.
Reliance: The other party relies on the promise and is induced to act.
Detriment: The party relying on the promise suffers a detriment for having relied on the promise.
Unconscionability: It would be unfair or inequitable to the other party if the party making the promise does not keep his promise.
If all of these elements are present, the party who made the promise may be estopped or prevented from going back on their promise, and the other party may be entitled to a remedy, such as damages or specific performance.
For example, your supplier promises to sell goods to you but asks you to arrange the delivery yourself. Because of his promise, you pay someone to take the goods to you. However, he later goes back on his promise and decides not to sell the goods to you. As you have relied on his promise and paid someone to do the delivery, you are now less well off and hence suffer a detriment. To avoid injustice, the supplier must keep his promise and sell you the goods. Alternatively, he needs to pay for the delivery as a remedy. The following is the analysis of this example using the above framework.
Legal relationship: You are dealing with your supplier.
Promise: Your supplier promises to sell you goods but asks you to arrange delivery.
Reliance: You rely on his promise and pay someone to do the delivery.
Detriment: After paying someone to do the delivery, you are now less well off.
Unconscionability: It would be unfair or inequitable to you if the supplier refuses to sell you the goods unless he pays you the cost of delivery.
You can learn more about this topic and relevant case law with our Contract Law notes.
