A promise which the promisor should reasonably expect to induce action or forbearance, and does, it is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise.
Plaintiff bid on, and was awarded, a contract to build housing for the Navy. The plaintiff’s subcontractor backed out of the agreement, forcing the plaintiff to cover with replacement goods at a higher cost. The agreement between the parties (contractor and subcontractor) was for goods over $500 and was not in writing, thus the lower court determined recovery was barred by the statute of frauds. On this appeal the plaintiff argued there was a valid, enforceable contract under the principle of promissory estoppel.
Did the plaintiff detrimentally rely on the oral agreement such that promissory estoppel applies and validates the contract?
The court held that the plaintiffs well pleaded complaint established a sufficiently binding promise by the defendant. The fact that the promise between the parties was entirely oral does not bar recovery. Here, there was an implied in fact promise supported by action thereon which establishes the existence of an enforceable agreement. Additionally, it held that equitable estoppel did not apply because there was no misstatement of an existing fact.