Should a court recognize and enforce a promise that induced detrimental reliance by the promisee, even in the absence of traditional contractual consideration?

Hoffman and his wife entered negotiations with Red Owl Stores, Inc. to establish a grocery store franchise. Red Owl's representative, Lukowitz, made a series of promises regarding the investment required, initially stating $18,000 and later increasing to $24,100 and then $26,100. Relying on these assurances and the promise of opening a store by fall 1961, Hoffman took several significant actions. He sold his existing grocery store fixtures and inventory in June 1961, followed by the sale of his bakery building in November 1961. Additionally, Hoffman made a $1,000 payment on a lot in Chilton for the proposed store location. Despite these preparations and Red Owl's repeated assurances, the franchise agreement never materialized. Crucial details such as store size, cost, design, and lease terms remained unresolved throughout the negotiation process.

The case was initially tried in a lower court, where a jury reached a verdict. Following the jury's decision, the trial court granted a new trial, but only on a specific aspect of damages. Subsequently, both parties filed appeals to the Supreme Court of Wisconsin. The plaintiff appealed the trial court's decision to grant a partial new trial, while the defendant cross-appealed, challenging certain findings made by the jury in the original trial.

(Currie, C.J.)

Yes. A promise that induces detrimental reliance by the promisee should be recognized and enforced, even without traditional contractual consideration. The doctrine of promissory estoppel, as articulated in Section 90 of the Restatement (First) of Contracts, provides a legal basis for enforcing promises that induce reasonable and foreseeable reliance. This principle prevents injustice by holding promisors accountable for promises that cause others to change their position to their detriment. The facts of this case clearly establish the elements of promissory estoppel: a promise was made, reliance on that promise was both reasonable and foreseeable, and the promisee suffered detriment as a result. Strict adherence to traditional contract principles would result in manifest injustice in situations where parties reasonably rely on promises to their detriment. The law must evolve to protect the legitimate expectations of parties in commercial dealings. However, the remedy in promissory estoppel cases is not automatically equivalent to expectation damages in contract law. Instead, damages are limited to what is necessary to prevent injustice, which may be less than full contractual damages. This flexible approach allows courts to balance the interests of both parties and achieve equitable outcomes. The adoption of promissory estoppel reflects a recognition that modern commercial relationships often involve reliance-inducing promises that fall outside traditional contract formation. By enforcing such promises, the law promotes fair dealing and protects parties who reasonably change their position based on another's assurances. This doctrine serves important policy goals of preventing unjust enrichment and promoting trust in business relationships.