What is a promissory estoppel?

Question

This topic has been brought up in my friends circle and its seems a legal reason to sue your employer

In: 6

Answer 1

It’s a very tricky and fairly limited means suing someone. It would be used in cases where you have a non-binding “agreement” and one party makes a decision that creates a loss or puts them at a disadvantage and then the other part renegs on their agreement. It really hinges the “reasonability” of the promise and the action taken that results in a loss.

For example, if a company promises me a job, so I quit my current job, sell my house, fly across the country to the new office location and they say “oh, we changed our mind, sorry”. In that I have taken a loss based on a promise that wasn’t delivered upon. In that case though, I’d have a hard time arguing in a court that moving cross country was a “Reasonable” action to take without even a written offer-letter.

A better example might be if a store promises me they will refund any clothes I buy that don’t fit, so I buy the clothes and take them home and they don’t fit and the store says “sorry, no refunds”.

In practice promissory estoppel isn’t a big thing because of that reasonability clause, for the little dumb things where it’s legit, it’s not worth litigating, for the big things that are huge, it wasn’t reasonable for the person to take the loss without getting something in writing first.

EDIT –

The best example in the case of an employer would be something like I find a new job that pays more and put in my notice. My boss says if I stay she’ll better the pay increase so I decide to stay with the company. When my next check comes nothing’s different and now my boss says never mind, she couldn’t get the pay raise approved, sorry. In that case I now have a loss (the lost earnings and opportunity I could have had) and this would be grounds for promissory estoppel. But again it’s not a great scenario because it’s not usually a great idea to sue the company you work for, plus the questionable reasonability of making employment decisions without having something in writing.