Question

Joseph Hoffman alleged that Red Owl Stores promised him that it would build a store building in Chilton, Wisconsin, and stock it with merchandise for Hoffman to operate in return for Hoffman’s investment of $18,000. The size, cost, design, and layout of the store building was not discussed, nor were the terms of the lease as to rent, maintenance, and purchase options. Nevertheless, in reliance on Red Owl’s promise, the Hoffmans sold their bakery and grocery store business, purchased the building site in Chilton, and rented a residence there for the family. The deal was never consummated: a dispute arose, Red Owl did not build the store, and it denied liability to Hoffman on the basis that its promise to him was too indefinite with respect to all details for a contract to have resulted. Is Hoffman entitled to some relief? On what theory?

Answer 1

Hoffman is entitled to some form of relief on the theory of promissory estoppel. Hoffman was one party who relied to his detriment on the promises made to him by Red Owl. Red Owl in this case either knows or should know about this reliance. It is now up to the court to fashion appropriate relief in equity in order to do what is fair.

A fair point made in favour of Red Owl is that reliance investments made even before the concerned parties have a solid contract, with all necessary terms and conditions, should not be the basis of any claim for liability on the relying party – Red Owl.