Brief Fact Summary.
The Appellees applied for a dealer franchise with local distributors (Appellants) for Emerson Radio & Phonograph to sell Emerson’s products. Appellants led Appellees to believe that the franchise was granted and a deliver of 30-40 radios was forthcoming, but that was not the case.
Synopsis of Rule of Law.
The true measure of damages for promissory estoppel is the amount of the loss sustained by expenditures in reliance upon the assurance of the promissory.
In reliance on the Appellants’ respresentations, Appellees incurred expenses in preparing to do business under the franchise, including employment of salesmen and soliciting radio orders. However, Appellees were not granted the franchise, and no radios were delivered.
The trial court held that a contract had not been proven; however, Appellants were estopped from denying a contract because their conduct had led Appellees to believe the franchise was granted. It awarded $1500, covering $1150 in case outlays and $350 calculated from the anticipated profits of 30 radios.
Were Appellees entitled to damages under promissory estoppel?
Yes. Judgment affirmed, with modifications.
The trial court was correct in holding the Appellants liable for moneys expended by the Appellees in expectation of a dealer franchise, totaling $1150.
The court erred awarding $350 of lost profits, as the true measure of damage is the loss sustained by expenditures in reliance upon the assurance of a dealer franchise.
Justice and fair dealing require that one who acts to his detriment in reliance upon a promising party should be protected by estopping the party who has brought about the situation through his conduct.