Contract law (2022): Quasi-contractual obligations: Promissory estoppel (Part Two)

United States.

Equitable estoppel.

Equitable estoppel is the American counterpart to estoppel by representation. Its elements are summarized as:

Facts misrepresented or concealed,

Knowledge of true facts,

Fraudulent intent,

Inducement and reliance,

Injury to complainant, and,

Clear, concise, unequivocal proof of actus (not by implication).

For example, in Aspex Eyewear v Clariti Eyewear, eyeglass frame maker Aspex sued competitor Clariti for patent infringement. Aspex waited three years, without responding to a request that it list the infringed patent claims, before asserting its patent in litigation. During this period, Clariti expanded its marketing and sales of the products. The Federal Circuit found that Aspex misled Clariti to believe it would not enforce its patent, and thus estopped Aspex from proceeding with the suit.

Another example of equitable estoppel is the case of Sakharam Ganesh Pandit, an Indian emigrant and lawyer who was granted American citizenship in 1914 due to his designation as "white". Subsequently, Pandit bought property, was admitted to the California bar, married a white woman, and renounced his rights to property and inheritance in British India. Following the Supreme Court case United States v Thind, which found that Indians were considered non-white, and in which Pandit represented the applicant, Bhagat Singh Thind, the US government moved to strip Pandit of his "illegally procured" citizenship. Pandit successfully challenged the denaturalization, arguing that under equitable estoppel, he would be unjustly harmed by losing his citizenship, as it would cause him to become stateless, lose his profession as a lawyer, and make his marriage illegal. In U.S. v Pandit, the U.S. Court of Appeals for the Ninth Circuit upheld Pandit's citizenship, ending denaturalization processes against him and other Indian-Americans.

Promissory estoppel.

In many jurisdictions of the United States, promissory estoppel is an alternative to consideration as a basis for enforcing a promise. It is also sometimes called detrimental reliance.

The American Law Institute in 1932 included the principle of estoppel into § 90 of the Restatement of Contracts, stating:

A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.

— Restatement (Second) removed the requirement that the detriment be "substantial".

However:

Equitable estoppel is distinct from promissory estoppel. Promissory estoppel involves a clear and definite promise, while equitable estoppel involves only representations and inducements. The representations at issue in promissory estoppel go to future intent, while equitable estoppel involves statement of past or present fact. It is also said that equitable estoppel lies in tort, while promissory estoppel lies in contract. The major distinction between equitable estoppel and promissory estoppel is that the former is available only as a defense, while promissory estoppel can be used as the basis of a cause of action for damages.

— 28 American Jurisprudence 2d Estoppel and Waiver § 34