Citation. 923 F.2d 566, 1991 U.S. App. 1355
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Defendant promised Plaintiff (operating as General Liquor’s) would continue to be Defendant’s distributor for Northern Indiana. Based on that representation, Plaintiff turned down an offer to purchase the company. Defendant subsequently withdrew its account and General was forced to accept a substantially lower offer.
Synopsis of Rule of Law.
A promise made with full expectation that some action will be taken and some expense likely incurred will be enforceable under an action for promissory estoppel.
Facts.
Plaintiff sought reassurance from Defendant while it was negotiating the contemplated sale and Defendant upon learning of the contemplated sale said emphatically that it would not take the Defendant line to another distributor. Defendant kept in close contact with Plaintiff to find out if it would sell and Plaintiff again sought reassurance the Defendant planned to stay with Plaintiff as a distributor on July 22 and 23rd. Plaintiff turned down the offer for the contemplated sales on July 23rd and the same afternoon Defendant decided to withdraw its line from Plaintiff but Plaintiff did not learn of the decision until July 30.
Issue.
Whether Plaintiff can recover the price differential from the first offer from Defendant on a theory of promissory estoppel.
Held.
As a matter of law, promissory estoppel could be invoked since Defendant could expect that certain actions would be taken and certain expenses would be incurred as a result of the promised distributorship. The court found Plaintiff had incurred the lost offer differential and that the situation was analogous to detrimental reliance on a promise of at will employment where the employee incurs moving expenses and the employer is liable under a promissory estoppel theory. Court remanded the case for trial to prove the reasonable reliance on Defendant’s assurances. Expectancy damages like lost profits were not recoverable.
Discussion.
The court found as a matter of law Plaintiff could recover on a theory of promissory estoppel for the offer differential but not any lost profits. Because of Defendant’s involvement in the negotiation process, it was reasonable for them to expect that expense might be incurred on the basis of the assurances. Although, in law the relationship was at will it could be reasonable for Plaintiff to change its position based on Defendant’s representations.
