Promissory Estoppel Legal Definition:

A promise made to another party to a contract that the contract will not be enforced in whole or in part and which, once acted upon, prevents subsequent proceedings to enforce the contract as against the person who relied on the promise.

Related Terms: Estoppel , Equitable Estoppel

A promise made to another party to a contract that the contract will be waived or not enforced, in whole or in part, and which, once acted upon by the promisee, prevents the promisor from taking subsequent proceedings to enforce the contract.

In law, a contract required consideration. But a promise not to follow-through on a contract has no discernible consideration and therefore, in strict common law theory, would be unenforceable.

However, the back-and-forth of promises not to enforce inevitably led to some manipulation and abuse which the common law could not address. Equity stepped-in with a new variation of estoppel and held that when a person promises not to follow-through on a contract, even though there may be no consideration to that specific promise, and therefore not a contract at law (per se), the promisor is stopped (estopped) from enforcing the contract for which he had extended his promise not to enforce.

The doctrine is known as promissory estoppel and it is housed as a rule of evidence, to act against the promisor party in court who seeks to complain of non-performance where the evidence also showed that he ought to be estopped based on his promise not to enforce the contract.

In Maracle v Travellers Indemnity Co., published at (1991) 2 S.C.R. 50, and quoting, in part, from another but previous Supreme Court decision of 1968:

"The principles of promissory estoppel are well settled.  The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on.  Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position.

"It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations."

A 1978 labour decision, not normally a reliable source for good law, adopted these words, the case being City of Penticton v CUPE 18 LAC 2d 307 as regards to promissory estoppel:

"The application and the attractiveness of the notion of estoppel is quite easy to appreciate. One party enjoys a legal right under a contract. That party says that it is not going to enforce that right on a particular occasion. The other party relies on that representation and acts accordingly. Then the first party changes its mind and decides that it does want to enforce its strict legal rights; but only after its counterpart has irretrievably committed itself. The equitable doctrine of estoppel is designed to prevent such an unfair tactic...."

"To use a common metaphor, you are not allowed to let someone go out on a limb so that you can saw him off."

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