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Wheeler v. White - 398 S.W.2d 93 (Tex. 1965)

Rule:

Where there is actually no contract the promissory estoppel theory may be invoked, thereby supplying a remedy which will enable the injured party to be compensated for his foreseeable, definite and substantial reliance. Where the promisee has failed to bind the promisor to a legally sufficient contract, but where the promisee has acted in reliance upon a promise to his detriment, the promisee is to be allowed to recover no more than reliance damages measured by the detriment sustained. Since the promisee in such cases is partially responsible for his failure to bind the promisor to a legally sufficient contract, it is reasonable to conclude that all that is required to achieve justice is to put the promisee in the position he would have been in had he not acted in reliance upon the promise. 

Facts:

Petitioner Wheeler entered into a contract whereby respondent White was to obtain a loan for petitioner within six months of the date of the contract. The loan described the contract terms and provided that respondent was to be paid for obtaining the loan and receive a commission on all rentals received from tenants procured by petitioner. After the contract had been signed by both parties, respondent assured petitioner that the money would be available and urged him to proceed with the necessary task of demolishing the building on the site for construction of the new building. Pursuant to such promises, petitioner proceeded to raze the old building and prepare the land for the new structure. No loan was procured, and respondent refused to provide one. Petitioner filed a case for damages, alleging that respondent had breached the contract to secure a loan or furnish the money to finance the construction of improvements upon land owned by respondent. The trial court dismissed petitioner's suit based on insufficiency of the contract terms. Petitioner appealed the case, asserting breach of contract or in the alternative, that if the contract itself was not sufficiently definite, estoppel from asserting such insufficiency.

Issue:

Did petitioner Wheeler's pleadings on the theory of promissory estoppel state a cause of action against respondent White, who allegedly breached a contract to secure a loan to finance construction upon land owned by respondent?

Answer:

Yes

Conclusion:

The Supreme Court of Texas reversed and remanded the case for trial, finding that although the terms of the contract itself lacked sufficiency, petitioner's alternative pleadings on the theory of estoppel stated a cause of action. The Court held that the function of the doctrine of promissory estoppel is defensive in that it estops a promisor from denying the enforceability of the promise. The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted. This remedy is always so applied as to promote the ends of justice. 

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