Academic

Chung on Promissory Estoppel

By Lawrence Solum

John J. Chung (Roger Williams University - School of Law) has posted Promissory Estoppel and the Protection Of Interpersonal Trust on SSRN. Here is the abstract:

This paper examines the role of interpersonal trust in the doctrine of promissory estoppel and the extent to which the law should protect this trust when a promise is made. Should the law protect a promisee's trust in a promisor no matter what and no matter how untrustworthy the promisor may be? Or, should the law encourage promisees to exercise care before trusting a promisor? This article contends that the law should not engage in the maximum protection of interpersonal trust, but should instead concern itself with promoting and protecting an optimal level of trust. A promisee should not prevail simply because he or she trusted the promisor. Instead, the law should ask whether the trust was reasonable and whether it was appropriate. Those who engage in a reckless level of trust should not be protected. The question raised by this approach is how to determine the level of trust that should trigger judicial protection. This article proposes a modest solution. It attempts to establish the endpoints of the continuum along which interpersonal trust should be evaluated. At one end are the situations where trust should be entitled to maximum protection. Such cases include ones where the promisee is engaged in a transaction that he or she cannot avoid, where he or she has no control over the structure of the transaction, and where the promisee has no choice but to trust the promisor (or more accurately, trust the legal system to enforce the promise). Another type of case where trust should be protected includes cases where the parties have developed a long-standing, pre-existing relationship to the point where the promisee has developed a reasonable basis to trust that the promisor will act in a manner consistent with that relationship. At the opposite end are the situations where trust should not be protected, and, indeed, should be discouraged. Trust should not be protected if (1) the promisee could have determined that the promisor was untrustworthy at a low cost to the promisee, or (2) if the promisee could have avoided the harm resulting from a broken promise by taking preventive measures that cost less than the amount of the potential harm.

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Full post as published by Legal Theory Blog on July 01, 2008 (boomark / email).