Hoffman v. Red Owl Stores, Inc.
- P owned a bakery and wanted to own a grocery store. P contacted D about opening a franchise.
- P told D that he had $18k in capital to open the store, and D said that would be sufficient.
- P bought a small grocery store to gain knowledge and experience before opening a Red Owl store. The store operated at a profit, so D told P to sell the store and assumed P that D would find a larger store for him.
- D selected a site for the store, and P put $1k down on the lot on D's assurance that everything was all set.
- D told P that he would have to sell the bakery business and building. P did so.
- At a meeting, D said P had to contribute $24.1k. Two weeks later, D told P that the deal could go through for $26k.
- P's father-in-law agreed to put up $13k if he could be a partner.
- D told P that the father-in-law would have to sign an agreement that the $13k was an outright gift. P would not go along with the proposal, and negotiations were terminated.
- Lower court found for P, but set aside verdict for damages relating to the sale of the smaller store. Ordered new trial.
- Affirmed on appeal, found for P, but new trial on damages from first store.
- Can a party recover for worsening its position in reliance on promises made by another party?
- A party can recover for worsening its position in reliance on promises made by another party through the doctrine of promissory estoppel.
- Three questions must be answered affirmatively to support an action for promissory estoppel:
- Was the promise one which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee?
- Did the promise induce such action or forbearance?
- Can injustice be avoided only be enforcement of the promise?
- P was induced to sell the grocery store fixtures and inventory and his bakery building on the promise that he would have a new store by fall.
- Injustice would result if P were not granted some relief because of the failure of the D to keep their promises which induced P to act to his detriment.
- Damages should not exceed the loss caused by the change of position, which is more than likely less than the promised reward.
- "Justice does not require that the damages awarded him, because of selling these assets at the behest of D, should exceed any actual loss sustained measured by the difference between the sales price and the fair market value."