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Life Skills #3

Raimir Perez

Florida National University

The Church of Narnia v ABCD Corporation

In this case, the Church of Narnia is suing ABCD Corporation for promissory estoppel because ABCD Corporation offered the Church a $5 million donation and then did not follow through. The Bishop of the Church of Narnia relied upon the promises of the ABCD Corporation and started work on a new building. Because ABCD Corporation did not follow through and the Bishop had already invested the amount of the donation in the project, there is reliance, a crucial factor in promissory estoppel. Investopedia (2018) says, "Promissory estoppel is a legal principle that a promise is enforceable by law, even if made without formal consideration, when a promisor has made a promise to a promisee who then relies on that promise to his subsequent detriment" (Investopedia, 2018). Clearly, the Bishop relied upon the promise that ABCD made to the Church.

Promissory estoppel is a legal theory because it is necessary to stop people and corporations from arguing in court that the promises they have made should not be enforced. They can argue that there was no contract (no consideration), but that must be proven, and contracts do not always take the form of a paper contract. In the case of ABCD Corporation, they believed that their promise of a $5 million donation to the Church should be forgiven, although the Bishop acted on the promise, because their financial situation took a down turn. However, because they promised the money, the Church of Narnia was relying on it and took measures to start the project that the money would have funded because of the promise. Now they are out the money based on the promise. That is the detriment that damages in the case will address if they are awarded.

Civil contract cases have two parts. One is the breach of contract portion and the other is the damages portion. When the court establishes there is a contract, and there was between the Church and the ABCD Corporation, then the damages are the measure of what the promisee is out. The NYU School of Law (2018) says, "A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise" (p. 23). That means that if the court does not find in favor of the Church of Narnia, there will be an injustice because the Church will be on the hook for the money that the bishop has already invested in the project.

In some cases, promissory estoppel may be the finding, but since there are no damages or limited damages, there is not much of a recovery in the case, but that will not be so with the Church. That was the case in Hoffman v Red Owl Stores, Inc. (1965). Hoffman recovered some damages but not many because he was not out of pocket as much as it may have seemed. Promissory estoppel can also be denied by the court if there is no contract as was the case in Wheeler v White (1965). In that case, Wheeler had acted on the promise he thought White had made and had torn down buildings thinking White was going to construct new and better buildings. When White did not come through on his promise, Wheeler sued, but the Texas Supreme Court found in White's favor because there was no express contract. The Church has an express contract and there are significant damages, so I believe that the court will find that ABCD Corporation will have to pay the Bishop for his expenses that were incurred because he relied upon their promise.

References

Investopedia. (2018). Promissory Estoppel. Retrieved from Investopedia: https://www.investopedia.com/terms/p/promissory_estoppel.asp

NYU Law. (2018). Damages for Breach of Contract. Retrieved from NYU Law: http://www.law.nyu.edu/sites/default/files/ECM_PRO_063763.pdf