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Doctrine of Promissory Estoppel: Definition, Examples & Elements

  • 0:05 Doctrine of Promissory…
  • 2:19 McIntosh v. Murphy (1970)
  • 5:43 Lesson Summary
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Lesson Transcript
Instructor: Kat Kadian-Baumeyer

Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

The doctrine of promissory estoppel allows a party to recover the benefit of a promise made even if a legal contract does not exist. Use of this doctrine relies on how significant the promisee's loss is in the absence of the fulfilled promise.

Doctrine of Promissory Estoppel

So what happens when someone makes you a promise, you rely on this promise, act on the promise and the person does not come through? In our personal lives, nothing will happen. We will move on and be more cautious next time. Legally speaking, when one party promises to perform and the other party relies on that promise, the injured party can sue. Even in the absence of a signed contract.

An example will help. Suppose you are the principal of a small high school. A musician approaches you to discuss implementing a music program on campus. Excited about the possibilities this will bring to your students, you begin planning for the program. You order construction of a new building complete with soundproofing and a stage. Next, new furniture and fixtures, drums and tubas are delivered. You may even hire staff to manage the new music program. Then, in one fell swoop, the promise is retracted. The musician simply changes his mind. You might think that, without a contract, there is no recourse to recover not only the expenses but the embarrassment of having this promise broken.

Well, the law cannot help you with the embarrassment, but the doctrine of promissory estoppel can help you to recover your losses. It states that an injured party can recover damages if those damages were the result of a promise made by a promisor and the promise was significant enough to move the promisee to act on it. There are specific elements that must be present:

  • Promisor made a promise significant enough to cause the promisee to act on it
  • Promisee relied upon the promise
  • Promisee suffered a significant detriment
  • Relief can only come in the form of the promisor fulfilling the promise

And, there need not be a contract involved. In fact, when promissory estoppel is used, it is because a contract did not exist. Now it may not be as simple as this. The court will look at a few things. First, the court will decide whether there was detrimental reliance, or a change in the position of the promisee, who acts based on the promise and becomes damaged as a result. An interesting court case will help to explain.

McIntosh v. Murphy (1970)

In March of 1964, George Murphy, owner of Murphy's Motors, located in Hawaii, flew to southern California to recruit for his car dealership. At the time, Dick McIntosh was searching for work. The two met on two occasions to interview.

In April of the same year, Murphy contacted McIntosh via telephone to inquire about his interest in a position. McIntosh expressed continued interest in the position, and the parties agreed that employment would begin within 30 days of the conversation. In the oral agreement, Murphy offered McIntosh a one-year employment contract. Sometime during April, McIntosh, just to be sure, sent a telegraph to Murphy advising him that he would be arriving in Honolulu on Sunday, April 26, 1964. It is important to note that McIntosh did not arrive empty handed. He brought along personal items, sold other items and rented an apartment.

In the afternoon of Saturday, April 25, Murphy called McIntosh to let him know he could begin employment as assistant sales manager on the coming Monday. Although he was confused by the title change, McIntosh accepted the assignment and reported to work. Things seemed like they were going smoothly when out of nowhere, everything changed. McIntosh was terminated from employment on July 16, 1964. Murphy claimed that McIntosh was unable to close deals on cars and could not train salespeople.

McIntosh sued Murphy for promissory estoppel, arguing that his decision to relocate some 2,200 miles from home was solely based on the promise of a yearlong contract for employment. Further, even though no written contract had ever been drafted, the promise made by Murphy in the oral contract was significant enough that McIntosh believed that employment would last for a period of one year.

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