Mere Promises Are Not Generally Enforceable
Business and Commercial Disputes By Harvey Binnall PLLC - 2018/12/21 at 12:34pm
In every state jurisdiction, mere non-contractual promises are not generally enforceable under the law. Unless the offer-acceptance paradigm has been satisfied (for the creation of a valid and enforceable contract), parties must rely on the application of “promissory estoppel” principles to ensure that their non-contractual agreements are enforced.
Promissory estoppel is a powerful tool for imposing civil damages in business dispute scenarios involving reliance-inducing promises. Let’s take a closer look at the elements that form the underlying basis for a promissory estoppel claim.
Elements of a Promissory Estoppel Claim
Generally speaking, promissory estoppel requires:
- Clear and unambiguous promise;
- Reasonable and foreseeable reliance by the party who has been promised something; and
- Financial harm caused by such reliance.
Consider the following.
Suppose that you run a craft workshop for high-end wood furniture. You engage in initial conversations with a business regarding rare wood supplies that could allow you to develop a new product line for luxury customers. The business verbally promises that they will deliver an initial supply of products for free to your workshop so that you can get a batch out to one of your major distributor customers in time for the holidays.
Now, given that you did not give consideration for the promise, there is no valid and enforceable contract. If the defendant-business reneges on their promise and fails to make the delivery of wood supplies, then your deal with the distributor may fall through as a result. Your reasonable and foreseeable “reliance” on their promise caused you to suffer financial harm (i.e., the loss of business with the distributor, and damage to that relationship).
Reasonable and Foreseeable Reliance
Circumstantial factors play a large role in determining whether promissory estoppel will apply to a particular case, and specifically with regard to “reasonable” and “foreseeable” reliance. Whether the reliance was reasonable and foreseeable is fundamentally a circumstantial determination — the court will evaluate the case holistically and attempt to understand the influences on each party’s decision-making, and whether the consequences were truly foreseeable.
For example, if one party makes a “promise” to another party in a casual, drinking setting, then the court will weigh their determination more heavily against reasonable and foreseeable reliance. If the setting is instead a business conference room, and the atmosphere is much more formal, then the circumstances may point to a finding of reasonable and foreseeable reliance.
Contact an Experienced Alexandria Business Dispute Lawyer for Comprehensive Guidance
Harvey & Binnall, PLLC is a boutique commercial litigation firm based out of Alexandria, VA and serving clients throughout Virginia, Maryland, and the Washington D.C. metro area. We have decades of experience representing the interests of those who are engaged in business disputes (such as breach of contract disputes), among other commercial conflicts.
Unlike many of our competitors, we provide thorough, tailored representation at every stage of the litigation process. We associate closely with clients and develop deep insights into the contours of their dispute, as well as the various business considerations surrounding the core dispute.
If you’d like to learn more about how we can help, we encourage you to call 703-888-1943 or send us a message online to request a meeting with an experienced Alexandria business dispute lawyer at Harvey & Binnall, PLLC.