Promissory Estoppel and Reliance

Promissory Estoppel is utilized under the absence of a formal contract, but with the assumption that the parties have maintained and acted in a way suggesting the presence of a formal contract. The function of courts regarding the doctrine is to utilize it to legally bind the otherwise informal agreement by imposition of a contract. This is done to ensure a fair deal to all the parties involved.

Estoppel is a set of legal doctrines used by the court to enforce “almost contracts.” Contract law in the United States dictates the way in which these promises are to be established. Literally speaking, ‘promissory’ refers to something that is ‘associated with promise’ and the term ‘estoppel’ means the process of enforcing a ban or restriction.

The point of Promissory Estoppel is to ensure credibility in the promises made by parties to stop them from going back on their word. It is a tool used in order to make parties perform as promised. Many consider this doctrine as a contract law exception.

Promissory Estoppel Enforcement

A party that believes another has defaulted on an agreement, is the party that usually begins the estoppel proceeding. This person or tentity is known as the Plaintiff. The defendant is ‘estopped’ or banned from claiming certain rights or making certain arguments. Effectively, this debars the defendant from presenting his or her defense. Also, the plaintiff may be ‘estopped’ or prevented from making arguments against the defendant related to the case.

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Types of Estoppel

    • Reliance Estoppels

These are the estoppels involving the reliance of one party on a statement given or action performed by another party. In this case, the promisor (the party that performed/passed a statement) is said to be estopped. This includes proprietary estoppel, promissory estoppel, and estoppel by factual representation

 

      • Equitable Estoppel
      • Proprietary estoppel
      • Promissory estoppels
      • Estoppel By Deed
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This is also known as the technical estoppel or formal estoppel. In this scenario, evidence produced before court prevents a denial of the truth regarding word or action performed by the litigant

    • Estoppel By Record

This judicial estoppel arises very often. It is primarily the cause of action in court bans on a revival of the same issues in court that have already been judged through legal proceedings in the past.

  • Estoppel By Silence

This is also known as acquiescence. When a party is given the opportunity to assert something, but they choose to remain silent – they are estopped from doing so at a later time as their silence put someone else at a disadvantageous position earlier.

Reliance Estoppel (Detrimental Reliance)

It is a subgroup under promissory estoppel. It is used in a situation when the recovery had to be made under the promissory estoppel doctrine. For this, the plaintiff must prove:

  • The existence of a promise
  • A significant amount of reliance placed on the promise made, that caused the claimant to be in a disadvantageous or detrimental position

It is fundamental that the key feature is a detrimental reliance that the claimant has been put into as a result of a promise made by the defendant.

Promissory Estoppel Claims have many exemptions, including the Statute of Frauds exceptions. If you believe you have a promissory estoppel cause of action, you would be well advised to have the merits of your case reviewed by an experienced attorney.