The last few guides have covered the doctrine of consideration, but this guide looks at the first of what are termed consideration substitutes. So, in the absence of consideration, if we have a gratuitous promise, is there any way to enforce that promise? The answer is yes, and promissory estoppel is one of the doctrines that allow us to do that.

Key Takeaways

• – We’ll do a quick review,
• – Look at the elements of promissory estoppel,
• – And then go through examples, focusing on one primary case to see how it works in practice.

What Is a Promise?

We’ve looked at what constitutes a promise, and we said that contract law follows the objective theory of contracts. That means when determining whether someone has made a real commitment to act (or not act) in a certain way, we look at their manifestation—their outward expression. The key question is:
How would a reasonable person interpret that manifestation?

We also apply:

• The ordinary meaning of the words used,
• Any technical meaning for specific legal terms,
• And the surrounding circumstances of the promise.

If a reasonable person would view that manifestation as a commitment, then we have a promise.

But once we establish a promise, we need to categorize it as either contractual or gratuitous.

In previous lessons, we focused on contractual promises, meaning promises that are part of an exchange. These are enforceable in court—if the promisor fails to follow through, the promisee can seek a legal remedy.

To determine whether a promise is contractual, we check for three elements:

1. Offer
2. Acceptance
3. Consideration

Our focus has been on that third element—consideration.

We’ve said that for a promise to be legally binding, it must be part of a bargained-for exchange—the promisor is making the promise with the expectation of receiving something in return.

In other words, they are motivated by a detriment from the promisee.

We also discussed how:

• In bilateral contracts, consideration usually comes in the form of a return promise.
• In unilateral contracts, consideration is a return performance.

We’ll dive deeper into those distinctions in future lessons.

Gratuitous Promises & Exceptions

For now, our focus is on gratuitous promises.

We still have a promise, but this time, nothing is coming back in exchange—there’s no consideration. Ordinarily, gratuitous promises are not legally enforceable.

But there are exceptions, and we’ve covered some of them before.

For example, a gift that has already been executed cannot be taken back. The promisor cannot later claim, “Oh, it was a gratuitous promise, so I want it back.” Once the gift has been delivered, that’s the end of the story—the initial gratuitous nature of the promise no longer matters.

And, in certain specific situations, the law makes some gratuitous promises enforceable. And that’s where promissory estoppel comes in.

Enforceable Promises Without New Consideration

A promise to pay a debt barred by the statute of limitations is legally enforceable, even without new consideration. The same applies to a promise to pay a debt discharged in bankruptcy. Similarly, if a person who was a minor when they incurred an obligation reaches the age of majority and affirms they will pay that debt, their promise is enforceable.

Contracts Made by Minors

A contract or promise made by a minor is generally voidable, meaning the minor can disaffirm it. However, if they affirm the obligation upon reaching the age of majority, they become bound by that promise. Even though they receive nothing new in return, the law enforces the promise.

Exceptions: Promissory Estoppel and Restitution

Another exception to the consideration rule is promissory estoppel, which is our focus today. In the next lesson, we will discuss restitution and promissory restitution.

Elements of Promissory Estoppel

The general definition of promissory estoppel comes from Restatement (Second) of Contracts, Section 90:

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

Restatement (Second) of Contracts, Section 90.

That’s a lot to unpack, so let’s break it into five key elements.

1. The Promise

A promise is a manifestation of intent to act or not act in a specified way, made in a manner that justifies the promisee’s belief that a commitment has been made.

This is assessed using the objective theory of contracts—would a reasonable person interpret the statement as a binding commitment?

A promise can be made through:

• Spoken or written words
• Implied conduct

However, it must always be clear, definite, and unambiguous regarding its essential terms.

2. Reasonable Expectation of Reliance

When the promisor made the promise, did they have a reasonable expectation that the promisee would rely on it? Would the promisee take action or refrain from acting based on that promise?

“Reasonable expectation” depends on context and circumstances. If a promise was made in a clearly joking manner, there would be no reason to believe the promisee would actually act on it.

So, we’ve looked at it from the promisor’s perspective and asked: If they made the promise, did they reasonably expect or foresee that the promisee would rely on it? Now, we’re shifting focus—did the promisee actually rely on that promise?

We use the but-for test, which also appears in other contexts, such as torts or criminal law. Here, we ask:
But for the promisor’s promise, would the promisee have acted or refrained from acting in this case?

We’re using the but-for test to determine reliance. If the promise wasn’t the reason that motivated the promisee to act (or not act), then it’s unclear whether there was actual reliance.

Now, one thing to note about reliance—and its connection to the previous element of reasonable expectation—is this: If the promisee’s actions are unreasonable, meaning they don’t align with the surrounding circumstances, then it’s unlikely the promisor could have foreseen their reaction. This ties back to the expectation element but also plays into the reliance element.

So far, we have:

1. A promise
2. A reasonable expectation that the promisee will rely on it
3. Actual reliance, meaning that but for the promise, the promisee wouldn’t have acted that way

Now, we ask: Does justice require enforcement of the promise?

Here, we’re looking at detriment—did the promisee suffer harm as a result of relying on the promise? Promissory estoppel is often summarized as detrimental reliance. In this context, “detriment” means harm.

However, this differs from the way detriment is used in consideration. In cases like Hamer v. Sidway, detriment in consideration doesn’t necessarily mean harm—it could even be beneficial. But in promissory estoppel, detriment means the promisee incurred an obligation they didn’t have before or waived a legal right they previously held.

For a gratuitous promise to be enforced under promissory estoppel, the promisee must have suffered some form of harm due to their reliance. If that’s the case, we say justice requires enforcement.

That brings us to the final element: What is the remedy for promissory estoppel?

Here, we must be careful. In standard contract law, the usual remedy is expectation damages—meaning the harmed party seeks compensation to be placed where they expected to be if everything had gone as promised.

Expectation damages reflect the full value of the promise. A court could still award expectation damages, even though the claim is based on promissory estoppel.

However, Section 90 of the Restatement states that the remedy may be limited as justice requires. This often means awarding reliance damages instead.

Reliance damages compensate the promisee for out-of-pocket expenses incurred due to their reasonable reliance on the promise. Essentially, this puts them back in the position they were in before they detrimentally relied on the promisor’s promise.

This amount is often less than expectation damages.

Here’s the structured version of your script with clear headings and logical flow:

Promissory Estoppel and Section 90

Limitations of Remedies in Promissory Estoppel

Section 90 states that a court can limit the remedy as justice requires. One reason for this is to prevent expectation damages from overcompensating the promisee.

In this context, remember that the key issue is that this is a gratuitous promise. Typically, promissory estoppel is a fallback argument.

• First, you want to check whether there is consideration—can the promisee argue that the promise is contractual in nature, thereby establishing the existence of a contract?
• If not, you fall back on an argument like promissory estoppel.
• As we’ll see in the next few lessons, restitution or promissory restitution could also apply.

Elements of Promissory Estoppel

Let’s quickly recap the key elements:

1. Promise – The promisor must have made a clear promise.
2. Reasonable Expectation – The promisor must have foreseen that the promisee would rely on it.
3. Actual Reliance – We determine this using the “but for” test:
   • But for the promisor’s promise, would the promisee have acted (or refrained from acting) as they did?
4. Detrimental Reliance – The reliance must have caused a detriment, meaning justice requires enforcing the promise.

If all four elements are met, we then consider the remedy:

• The remedy could be expectation damages (the full value of the promise).
• Or it could be reliance damages (limited to money spent by the promisee in reliance on the promise).

Example: Bob and Bo

Now, let’s look at an example:

The Promise

Bob writes a letter to Bo:

Dear Bo,
Hope school is finishing up well for you. If you stay in Naples this summer, you may stay at my house for free.
Very truly, Professor Bob.

Here, Bob is making a promise that Bo can stay at his house for free if he remains in Naples for the summer.

The Decision

Bo receives another offer:

Bo, we’d love for you to stay with us this summer at Payne & Fears LLP in Newark, New Jersey.

However, Bo declines:

Mr. Payne, I’m very grateful for your offer, but I’ve decided to stay in Naples this summer. I have an offer for free housing that’s just too good to pass up.

Bo then writes to Bob:

Hey, Professor Bob, I got your letter.

Hey, Bo.

Once I got your letter, I took a job in Naples for the summer.

The Betrayal

Well… about that letter.

What do you mean, ‘about that letter’?!

Oh, hi Bo… I didn’t expect to see you here.

Bob, what’s going on? Why is Herman at your house?

Come on, Bo. I didn’t hear from you. What was I supposed to think? I gave my extra room to Herman. I’m sorry.

No, Bob! You can’t do that! I gave up a job in Newark because you promised me!

Bo, Newark? Really? Hard choice—Florida or New Jersey? Maybe you should’ve paid better attention in contracts class. We don’t have a contract—I can do what I want.

Really? That’s how you’re going to be? What about fairness? What about following through on your word?

I’m sorry, Bo. You’ve got to find somewhere else to stay this summer. Accept it and move on.

I thought you were a friend.

True friends stab you in the front, not the back, Bob.

Legal Analysis

Bob’s letter was a gratuitous promise.

• He stated that Bo could stay at his house for free if he stayed in Naples for the summer.
• There was a condition attached (Bo had to stay in Naples), but this was just a conditional gift.
• Bo had control over whether to stay in Naples, but his decision to stay is not consideration.

Bob’s promise induced a detriment for Bo, but it does not count as consideration because:

• There is no evidence that Bob’s promise was part of a bargain or exchange.
• There is nothing suggesting that Bob had a vested interest in Bo staying in Naples.
• Since it was not a bargained-for exchange of legal value, it remains a gratuitous promise rather than an enforceable contract.

Here’s your structured and corrected script while keeping the length and tone intact:

Promissory Estoppel Explained

Absence of Consideration

If we look at it, what was Beau given? Nothing. There was no return. Even if there was a detriment—whatever that detriment was, like sticking around—it wouldn’t have constituted consideration.

So we have to ask: what’s the fallback? The one we’re focused on in this lesson is promissory estoppel.

Elements of Promissory Estoppel

To determine if promissory estoppel applies, we need to check whether its elements are met.

1. Was There a Promise?

The answer is likely yes. Bob made a promise to Beau. It meets the legal definition of a promise—it was a manifestation of an intention to act in a particular way.

Bob’s promise was made in a way that justified Beau’s understanding that Bob had made a commitment to him. This wasn’t vague or implied; it was a clear, outward expression in the form of a letter.

2. Did Bob Expect Beau to Rely on It?

Yes, absolutely. Bob was Beau’s professor and knew Beau was deciding where to work for the summer. If Beau had free housing, he might stay in Naples and work locally.

Bob expected Beau to rely on his promise—not because that was his main motivation, but because he was being kind. He certainly knew or expected that Beau might not seek housing elsewhere and would likely stay in Naples based on the offer of free housing.

3. Did Beau Actually Rely on the Promise?

Yes, he did.

Now, we can debate whether Beau handled it well in terms of communicating with Bob. But the fact remains: he relied on it.

• He turned down a job at Payne & Fears, assuming he had free housing.
• Now, he’s in a situation where he rejected that job, took one in Naples, and has no housing.
• This reliance led to a detriment—he ended up worse off.

4. Was the Reliance Detrimental?

Yes.

We can even use the but-for test here:

“But for the offer of free housing, would Beau have stayed in Naples?”

The answer appears to be no. He relied on Bob’s promise, and that reliance caused harm—he passed on a better opportunity and ended up with no housing.

Possible Remedies

What’s the remedy? That’s unclear, but it could be:

• The full value of the promise (the cost of housing)
• Or any expenses Beau incurred in reliance on the promise

Either way, promissory estoppel applies.

Even though there’s no consideration, Beau relied on Bob’s promise, and that reliance was detrimental. The elements of promissory estoppel are all met.

Why Should the Court Enforce It?

Although the promise was gratuitous, in equity and fairness, the court should enforce it under the doctrine of promissory estoppel.

The idea of estoppel is that, in fairness, Bob shouldn’t be allowed to claim that the promise was merely gratuitous and unenforceable. Instead, he should be stopped and forced to honor that promise.

Beau’s Perspective

So… that’s what happened. Beau relied on it.

I’ve got a bad feeling about this.

One week later…
“Guys, there’s one frappuccino left. I’m taking it. You owe me for kicking me out of the house!”

“You’ll never find a more wretched hive of scum and villainy.”

In some on Promissory Estoppel

Promissory estoppel serves as a crucial safeguard in contract law, ensuring that promises made—and reasonably relied upon—are upheld, even when no formal consideration exists. In this case, Beau’s reliance on Bob’s promise resulted in a clear detriment, making it unfair for Bob to simply walk away from his commitment.

The key takeaway? A promise can carry legal weight when:

• It’s made with the expectation that someone will rely on it.
• The person does, in fact, rely on it.
• That reliance leads to a significant loss or harm.

Courts use promissory estoppel to prevent injustice, ensuring that people don’t suffer due to broken commitments they had every reason to trust.

So, whether you’re dealing with contracts, business agreements, or everyday promises, remember: sometimes, a simple promise can be more binding than it seems.