Wheeler owned land and entered into a written agreement under which White was to obtain from a third party, or provide himself, a $70,000 loan within six months to finance construction of improvements on Wheeler's property. After the contract was signed, White assured Wheeler the money would be available, urged him to demolish existing buildings, and stressed that if the money could not be obtained elsewhere he would make the loan himself. In reliance on those assurances, Wheeler razed the existing buildings and prepared the site for construction, but White later told him there would be no loan. Wheeler alleged he then made reasonable efforts to obtain the loan himself but was unsuccessful.
Issue
Whether the written financing agreement was too indefinite to be enforceable, and if so, whether Wheeler's allegations nevertheless stated a cause of action under promissory estoppel based on White's assurances and Wheeler's detrimental reliance.
Rule
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, is binding if injustice can be avoided only by enforcement of the promise. In such a case, promissory estoppel functions defensively by estopping the promisor from denying enforceability, and the promisee may recover no more than reliance damages measured by the detriment sustained, not expected profits.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
In Dallas, Nora Bennett signed a short writing with Red Mesa Capital, under which Red Mesa would either arrange construction financing for her warehouse project or fund it itself. The writing said the loan would be repaid over time at a reasonable rate, but it omitted key repayment details; after signing, Red Mesa repeatedly told Nora to begin site preparation because the money would be available, and she spent substantial sums grading the land and removing old pavement before Red Mesa refused to provide any financing.
If Nora sues, what is the strongest argument for allowing her claim to proceed?
Explanation. The majority recognized that an otherwise unenforceable promise may still support relief under promissory estoppel when the promisor should reasonably expect to induce action of a definite and substantial character, does induce it, and injustice can be avoided only by enforcement. The doctrine does not make the indefinite contract itself complete, but it can estop the promisor from denying enforceability for purposes of reliance-based relief.