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What is the Difference Between Promissory Estoppel and Equitable Estoppel?

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  • Written By: R. Kimball
  • Edited By: Daniel Lindley
  • Last Modified Date: 03 December 2016
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Promissory estoppel is a cause of action that might be asserted against a party for the first party’s detrimental reliance upon a promise from the second party. Equitable estoppel is a defense against a claim of one party. In equitable estoppel the party claiming estoppel is basing its defense on assertions of present or past facts. Promissory estoppel goes toward the second party’s future intentions.

Estoppel itself is used to keep a party from promising one thing and then changing the circumstances after a second party has relied upon the promise. Promissory estoppel allows the party who was wronged by his or her reliance upon the specific promise or assertion to collect damages. In an issue of promissory estoppel, the promise must be definite.

A representation can be made either by words or conduct in equitable estoppel. A party who has a duty to make a statement but fails to make one is in effect making a statement by its silence. The party making the representation intends for the other party to rely upon such a representation.

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After the first party makes a representation by word or deed, it may not contradict its representation. The second party states that the first party is estopped from changing its position based upon the first party’s initial representation to the second party. The second party’s claim of estoppel is a defense against whatever claim the first party is putting against the second party. Each of these claims must be factual in nature in order for the two parties to argue them.

The party who detrimentally relied upon the promise made by another party may use promissory estoppel to attempt to get relief for whatever problem the reliance has caused. The party requesting relief will have to prove to the court that the first party made a specific promise and that the second party took an action or actions based upon such a promise. In order to receive relief, the result of the actions taken by the second party must have resulted in some form of loss. Again, the actions taken and the loss incurred must be factual in nature, or there will be no relief granted to the requesting party.

The manner in which each of these forms of estoppel is argued varies by jurisdiction. Certain jurisdictions rarely permit the defense of equitable estoppel. Equitable estoppel is less precise and as such might be more difficult to prove. Promissory estoppel has certain specific elements that must be proven in order for the cause of action to exist; thus, it is permitted in all jurisdictions.

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Vincenzo
Post 2

@Soulfox -- An estoppel action is quite effective in those "handshake deals" where someone relied on the promise of another to his detriment (the first scenario in which Sue painted Joe's house is a good example of such a deal). In contract law, the "statute of frauds" doctrine states (roughly and crudely) that a contract valued at more than $500 is invalid if it is not written down.

Promissory estoppel can nullify that rule in cases where it just isn't fair to let one party make a promise and then not honor it.

Soulfox
Post 1

Promissory estoppel is a common cause of action that is dead easy to understand. Let's say, for example, Sue agrees to paint Ed's house. Sue buys supplies and paints the house based on Ed's promise to pay her. Ed changes his mind and refused to pay Sue, claiming there was no contract so he isn't obligated to give her a dime.

Is it fair to let Ed have his house painted at not cost to him? In such an instance, it is equitable to award Sue the money she should have received from the job.

How is that different from equitable estoppel? Let's take our scenario again and say that Sue had arranged to paint Joe's house. Joe

wrote down the address wrong and Sue wound up painting the house belonging to Sam, Joe's next door neighbor. Sam sees Sue painting his house and keeps his mouth shut. When the job is done, sue can bring an equitable estoppel action claiming that Joe knew his home was being painted but decided to keep quiet instead of asking Sue why she was working on the home. Again, equity suggests that Sam shouldn't get a free house out of the deal -- he knew or should have known Sue made a mistake and should have taken steps to correct it.

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