Also, I can't figure out how to put text after the link to the rest of the post, so here's my "thanks for reading!" in advance. And also my PS: I saw a Delorean on the street yesterday. And in a confusing contradiction, it had the letters TARDIS written on the back window. Two cult classic forms of time travel referenced in the fleeting span of a couple seconds!
[Law Firm’s Name and Contact Information]
September 26th, 2013
Mr. Chris Smith
[Title and Address]
Re: Offer by Kingpin Supermarkets enforceable under promissory estoppel.
Dear Mr. Smith,
We have had a chance to review the facts of your case as
it relates to an enforceable promise. Put concisely, the particulars of your
case likely would likely yield a verdict in your favor should you pursue action
against Kingpin Supermarkets. In order for a promise to be binding you must
meet the three requirements for promissory estoppel as outlined below, and your
interactions with Mr. Venaleone and Ms. Carlisle show that your reliance on his
word was probably justified, that the damages you suffered were a direct result
of that reliance, and that enforcing the promise is an appropriate form of
recompense. While this conclusion is not a guarantee of success, researching
relevant Iowa cases and applying your particular facts to the rules they
establish leads us to believe litigation would end in your favor.
Facts:
You were approached by Kingpin Supermarkets’ highest authority
after demonstrating a desirable product. The barbecue sauce you produced had
won multiple awards, and this was not your first time considering taking it to
a bigger market. Previously, you had turned down a similar offer from one Mr.
Sancus, but the particular details of the one presented by Mr. Venaleone
induced you to rely upon it. More specifically, the preferred placement of your
product in the stores combined with a potential to make it available nationwide
were terms you required to set things into motion. You suffered damages by
quitting your tenured position, by incurring expenses developing and producing
three flavors of barbecue sauce, and in hiring an employee. Also, you were told
multiple times by people in positions of authority to proceed without a written
contract, which you did only after multiple urgings.
Explanation:
This
case would be tried in an Iowa court due to the substantial ties Kingpin
Supermarkets has to the state and your citizenship there. This means that Iowa
law will be what we look to in determining what the court is likely to decide.
The issue of promissory estoppel has three parts, which are defined by the most
recent Iowa precedent we have looked at as: “(1) a clear and definite
agreement, (2) proof the party seeking to enforce the agreement reasonably
relied upon it to his detriment, and (3) a finding that equity supports
enforcement of the agreement.” Chipokas
v. Hugg, 477 N.W.2d 688, 690 (Iowa Ct. App. 1991). By looking at each of
these aspects in detail, we can come quite close to an accurate prediction of
the result should you take this case to trial.
1. A Clear and Definite Promise
This first point is one that has proven most contentious in past
cases. To determine whether a clear and definite promise was made, it is
important to have clear evidence of that fact. When such evidence is not
provided, the case falls apart, as in Estate of Graham v. Fergus 295
N.W.2d 414, 416 (Iowa 1980). That case failed the "clear and definite
promise" test for two reasons. The first was that it lacked sufficient testimony
to prove the clarity of the agreement, and the second was that no
"rational factfinder" could conclude a single communication in a
barnyard years before was binding. Your situation is superior to these facts on
both counts. Firstly, you have written proof that Kingpin Supermarkets wanted
to enter into a deal with you. Secondly, there was more than one contact with
representatives from the company. Finally, the head of the company himself
stated it was a serious offer, and there was no significant passage of time to
make a court think you had acted unreasonably in relying on the promise. These
elements all provide a much more substantial basis for successful litigation
than was present in Graham, where
only one testimony was given on an issue that could easily be doubted due to
the passage of time. Id.
The reason two other cases we looked into failed was due to a lack
of a concrete agreement. In a case called International Bank of Waterloo v.
Moeller, the plaintiff was denied promissory estoppel because the letter
they were relying on as evidence of a promise named necessary conditions for it
to be carried out, one of which was not met, voiding the promise. 434 N.W.2d
887, 889 (Iowa 1989). In the second, the plaintiff and the defendant both
signed a promise to make a contract, which also had a clause saying it was
conditional upon a final lease acceptable to both parties. Chipokas v. Hugg, 477 N.W.2d 688, 690 (Iowa Ct. App. 1991). These
sorts of conditional statements in the promise provide difficulty. However, in
your recounting of events you say the conditions for the promise were
threefold: increase production facilities, develop variations, and complete
paperwork. You can demonstrate your fulfillment of the first two conditions, while
the third obviously didn't take place. I still think you have a better case
than the two I cited because of the details of your particular communication with
Kingpin, namely their urging you to proceed without a signed contract. If they
were serious about the condition of having a signed contract, they would not
have urged you go on without it.
The agreement you had is more robust than the one in Graham, with more proof and therefore
more definitiveness. It is also clearer in its conditions, which you met and
which you were told to not treat as reasons to prevent you from acting upon the
promise. This heightened degree of clarity and robustness set your case apart
from those that failed based on the first condition for promissory estoppel.
2. Reasonable Action in Reliance and Detriment
Induced Thereby
Whether or not you acted reasonably in relying on the
promise made by Mr. Venaleone is substantially intertwined with how clear and
definite the promise was. The clearer the promise, the more reasonable your
actions were in relying on it. This is outlined in Graham, as quoted above, where rationality is tied to clarity. If a
person cannot be reasonable in acting upon an unclear agreement, it is likely
that they are behaving reasonably if the agreement is, in fact, clear. Because
your agreement is clearer than those which caused their cases to fail, it is
obviously more likely that you will succeed. None of the cases we have
researched raised reasonableness as an issue under much dispute in itself,
preferring to call the clarity of the promise into question rather than hinge a
case upon a more subjective definition of what is reasonable. Because in the
previous section we demonstrated that your agreement was clearer than the ones
in cases which failed, it is already likely that you acted reasonably in
relying upon that agreement. However, there are a few more factors to consider
before considering the topic closed.
The defense will likely point to the fact that Ms. Carlisle didn’t
explicitly say to make the sauce, but simply said to “be preparing to make as
much sauce as possible.” However, it shouldn’t be hard to show that this
statement was still enough to induce action, since preparation in this case
obviously had financial implications. Should you take this case to trial, we
would argue that it is impossible to prepare for this scale of undertaking
without spending money and taking significant actions, a fact Kingpin would
have been aware of when making the offer and urging you to proceed without a
written contract. Again, the fact that you were approached, not by middle
management, but by the head of Kingpin himself provided the necessary authority
to justify you in believing what he
told you would be binding, as he clearly has the power to make contracts of the
sort you claim to have had.
One
final point of contention may be that you didn’t act reasonably due to your
inexperience in matters such as this. Because a factor in determining what a
reasonable person would have done relies on their being capable of weighing the
options well, it is important to show you were not caught up in the moment. RESTATEMENT (SECOND) OF CONTRACTS §
90 (1981). However,
the fact that you had already turned down an offer from Mr. Sancus points to
the fact that you are not one to disregard prudence in pursuit of your passion.
Having shown you acted reasonably, we must still show that your reliance upon
the promise was the cause of your detriment. In this matter your testimony that
you wouldn’t have rented property, quit your job, hired an employee, or taken
out a loan should be sufficient.
3. Equity Supports Enforcement of the Agreement
This issue is basically guarding against a case where,
even though the first two conditions are satisfied, the Court’s acknowledgment
of that fact doesn’t enable them to rectify the situation by enforcing the
promise. In your case it should be obvious that requiring Kingpin Supermarkets
to abide by their word would produce an equitable result. You took the actions
you did under the assumption that Kingpin would also perform certain actions.
If they performed the actions, then you would be satisfied that justice had
been accomplished, so the enforcement of the promise is a reasonable thing to
request of the court.
Conclusion and
Recommendation
Because Iowa law governs in this case, we go with the
definition provided by precedent established in Iowa courts. This precedent
lays out the three requirements for enforcement of a promise under promissory
estoppel. The clear agreement, reasonable reliance, and equitability of
enforcement are all supported by the facts of your case. The nature of the
agreement as one between people with the power to make the offer and a person
likely to take action based on that promise justify your reliance. That,
coupled with the fact that you agreed solely because of the specific terms
presented show that your reliance was reasonable, and the detriment you
suffered as a direct result will likely compel the court to enforce the
contract as an equitable way to find justice.
Of
course, even considering what we think the likely outcome of your case would be
should you pursue it, there are steps we would recommend you take in the
future. The first of these is to be sure of having a contract in hand before
acting on an agreement. We would also suggest taking into account the time and
cost of pursuing litigation. If your only goal is enforcement of the promise,
it is unclear if this enforcement will reimburse you for time or money lost.
Even should you be reimbursed for money lost, it is likely very difficult to
assess exactly how much you lose by not having your product placed in a particular
location. For these reasons reaching an agreement outside of court is
appealing.
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