In order for the doctrine of promissory estoppel to be invoked the evidence must show that the promise is made under circumstances where the promisor intended and reasonably expected that the promise would be relied upon by the promisee and further that the promisee acted reasonably in relying upon the promise. Furthermore promissory estoppel should be applied only if a refusal to enforce it would be virtually to sanction the perpetration of fraud or would result in other injustice. Under the doctrine of promissory estoppel a promise is binding and will be enforced when it is a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance and if injustice can be avoided only by enforcement of the promise. In order for the doctrine of promissory estoppel to be invoked as a substitute for consideration the evidence must show (1) the promise is made under such circumstances that the promisor reasonably expected the promisee to act in reliance on the promise, (2) the promisee acts as could reasonably be expected in relying on the promise, and (3) a refusal by the court to enforce the promise must be virtually to sanction the perpetration of fraud or must result in other injustice.
The parties entered into a contract under which the plaintiff landowner granted the defendant individual an option to purchase his land at an agreed price for a period of 120 days. Defendant did not pay the stipulated consideration. Plaintiff landowner brought an action against defendant individual, seeking a declaratory judgment that the option contract for the purchase of land was null and void. The individual counterclaimed for damages for the landowner's failure to convey the land under the option contract. The District Court entered a summary judgment for the landowner. The individual appealed and the court affirmed the trial court's judgment.
Should the trial court have applied promissory estoppel as a substitute for consideration?
The court rejected the individual's claim of promissory estoppel. The individual's efforts and expense to find investors to purchase the land did not constitute acts that could have reasonably been expected as a result of extending the option promise. The court held that the individual's power of acceptance was terminated when he learned that the land had been sold to the third party.