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D & G Stout, Inc. v. Bacardi Imps., Inc. - 805 F. Supp. 1434 (N.D. Ind. 1992)

Rule:

The promisor must have made the promise with the expectation that the promisee would rely on it. This element is established if the promisor either had actual knowledge of the promisee's reliance or reasonably should have expected promisee to rely on the promise. The standard for testing a promisor's expectation is an objective one, under which the promisor is bound if the promisor should have had reason to expect reliance, even if the promisor did not in fact expect it. An actual expectation of reliance is unnecessary for a promise to be binding under an estoppel theory.

Facts:

After reversal of the court's grant of summary judgment to defendant distiller, the court considered whether the doctrine of promissory estoppel applied to the assurances given by the distiller to plaintiff distributor of its continued relationship with the distributor. The distributor was engaged in the distribution of liquor for the distiller and others during a difficult time in that market. The distributor negotiated with a potential purchaser of its business and at the same time sought assurances from the distiller that it was not planning to end its relationship with the distributor. The distiller assured the distributor of their continued business relationship and, based on those assurances, the distributor decided not to sell the business. Shortly thereafter, the distiller advised the distributor that the relationship would be discontinued and the distributor was forced to sell its business at a significantly lower price. The distributor then brought an action against the distiller based on promissory estoppel.

Issue:

Was defendant liable for damages under the doctrine of promissory estoppel?

Answer:

Yes

Conclusion:

The court granted judgment in favor of the distributor. It found that the distiller made promises as to its future actions and that the distributor reasonably relied on the promise when it turned down the offer of a third party to purchase its business. Although the defendant's promise was conditioned on future events and limited in duration by its context, and although the defendant was unaware of the nature of the plaintiffs' reliance on the promise, the plaintiffs showed that the promise was made with the expectation that the plaintiffs would rely on it, that the promise induced reasonable reliance of a definite and substantial nature, and that injustice could be avoided only by the promise's enforcement through an award of damages.

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