Contract Glossary
Promissory Estoppel
Definition
A legal doctrine that makes a promise enforceable even without a formal contract, when one party reasonably relied on the promise to their detriment. If someone made you a clear promise, you acted on it in a way that was reasonable, and you suffered a loss because of that reliance, you may have a claim even though no contract was signed.
In Practice
A company verbally promises a contractor that they'll be awarded a $500,000 renovation project, asking the contractor to 'start preparing.' The contractor turns down other jobs, hires additional crew, and purchases materials, investing $80,000 in reliance on the promise. The company then gives the project to someone else. Even without a signed contract, the contractor may recover their $80,000 in reliance damages through promissory estoppel because the company's promise was clear, the contractor's reliance was reasonable, and the loss was foreseeable.
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