What is a Promissory Estoppel?

What is a Promissory Estoppel?

Promissory estoppel is a legal principle that prevents a party from going back on a promise, even if there is no formal contract, if the other party has relied on that promise to their detriment. It is used to enforce promises in situations where strict contract law may not apply.

Key Elements of Promissory Estoppel:

1. A Clear and Definite Promise – One party makes a promise that is reasonably expected to induce action or forbearance.
2. Reliance on the Promise – The other party relies on the promise and takes action or refrains from doing something based on it.
3. Detrimental Impact – The reliance results in a loss or significant disadvantage to the relying party.
4. Injustice Can Only Be Avoided by Enforcement – The court determines that failing to enforce the promise would lead to an unjust outcome.

Example:

A landlord promises a tenant that they will renew the lease for another year, and based on that, the tenant does not look for alternative housing. If the landlord then refuses to renew, the tenant may invoke promissory estoppel, arguing that they relied on the promise and suffered harm.

Promissory estoppel is often used in employment disputes, real estate matters, and business transactions where informal promises create reasonable reliance. It serves as a fairness-based exception to strict contract law.