§90. PROMISE REASONABLY INDUCING ACTION OR FORBEARANCE
(1) 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.
a. Relation to other
rules.... This Section is often referred to in terms of "promissory
estoppel," a phrase suggesting an extension of the doctrine of estoppel.
Estoppel prevents a person from showing the truth contrary to a representation of fact made by
him after another has relied on the representation....
Certainly reliance is one of the main bases for enforcement
of the half-completed exchange, and the probability of reliance lends support to the enforcement
of the executory exchange. See Comments to §§72, 75. This Section thus states a basic principle
which often renders inquiry unnecessary as to the precise scope of the policy of enforcing
bargains. Sections 87-89 state particular applications of the same principle to promises
ancillary to bargains, and it also applies in a wide variety of non-commercial situations.
b. Character of reliance
protected. The principle of this Section is flexible. The promisor is
affected only by reliance which he does or should foresee, and
enforcement must be necessary to
avoid injustice. Satisfaction of the latter requirement may
depend on the reasonableness of the
promisee's reliance, on its definite and substantial character
in relation to the remedy sought, on the
formality with which the promise is made, on the extent to which
the evidentiary, cautionary,
deterrent and channeling functions of form are met by the
commercial setting or otherwise, and on
the extent to which such other policies as the enforcement of
bargains and the prevention of unjust
enrichment are relevant....The force of particular factors
varies in different types of cases....
2. A promises B not to foreclose, for a specified time, a
mortgage which A holds on B's land.
B thereafter makes improvements on the land. A's promise is
binding and may be enforced by denial
of foreclosure before the time has elapsed.
3. A sues B in a municipal court for damages for personal
injuries caused by B's negligence.
After the one year statute of limitations has run,B requests A
to discontinue the action and start again
in the superior court where the action can be consolidated with
other actions against B arising out
of the same accident. A does so. B's implied promise that no
harm to A will result bars B from
asserting the statute of limitations as a defense.
4. A has been employed by B for 40 years. B promises to pay A a
pension of $200 per month
when A retires. A retires and forbears to work elsewhere for
several years while B pays the pension.
B's promise is binding.
c. Reliance by third
persons. If a promise is made to one party for the benefit of another, it
is often foreseeable that the beneficiary will rely on the
promise. Enforcement of the promise in such
cases rests on the same basis and depends on the same factors as
in cases of reliance by the promisee.
Justifiable reliance by third persons who are not beneficiaries
is less likely, but may sometimes
reinforce the claim of the promisee or beneficiary.
d. Partial enforcement.
A promise binding under this section is a contract, and full-scale
enforcement by normal remedies is often appropriate. But the
same factors which bear on whether
any relief should be granted also bear on the character and
extent of the remedy. In particular, relief
may sometimes be limited to restitution or to damages or
specific relief measured by the extent of
the promisee's reliance rather than by the terms of the
promise.... Unless there is unjust enrichment
of the promisor, damages should not put the promisee in a better
position than performance of the
promise would have put him. See §§344, 349.
8. A applies to B, a distributor of radios manufactured by C,
for a "dealer franchise" to sell
C's products. Such franchises are revocable at will. B
erroneously informs A that C has accepted the
application and will soon award the franchise, that A can
proceed to employ salesmen and solicit
orders, and that A will receive an initial delivery of at least
30 radios. A expends $1,150 in preparing
to do business, but does not receive the franchise or any
radios. B is liable to A for the $1,150 but
not for the lost profit on 30 radios....
9. The facts being otherwise as stated in Illustration 8, B
gives A the erroneous information
deliberately and with C's approval and requires A to buy the
assets of a deceased former dealer and
thus discharge C's "moral obligation " to the widow. C is liable
to A not only for A's expenses but
also for the lost profit on 30 radios.