Promissory Estoppel: A Guide To Contractual Commitments Without Consideration

Contracts are the backbone of numerous transactions, business dealings, and personal agreements. Typically, for a contract to be legally binding, it must include consideration — a mutual exchange of value. However, not all enforceable agreements follow this traditional path. In this article, we consider the concept of promissory estoppel, an exception to the general rule of consideration, providing a lifeline for promises made without a direct exchange of value. We will define promissory estoppel, explore its three core elements, and discuss the remedies available under this doctrine.

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I. Exploring the Doctrine of Promissory Estoppel

The doctrine of promissory estoppel acts as a safety net, ensuring that promises made without consideration can still be enforceable under certain conditions. Defined in Section 90 of the Second Restatement of Contracts, promissory estoppel requires the promisor to make a reasonable promise that leads the promisee to take action or show restraint. If this promise induces action or restraint and enforcing the promise is the only way to prevent injustice, the promise becomes binding. This doctrine ensures fairness and accountability, even when traditional contractual elements are absent.