Hoffman v. Red Owl Stores

–          Nov. 1959, Hoffman contacted Owl to buy a franchise. Only had 18K to work with

  • Assured by Lukowitz, that $18,000 was enough.

–          Acquired small grocery as to gain experience, on June, 1961 sold the business on advice from Lukowitz—this is where the disparity of money issue comes into play.
–          Nov, 1961 Lukowitz advised to sell bakery, Hoffman did so for $10,000, loss of $2,000.

  • Sold bakery ($10,000) because Lukowitz said it “was time to go ahead with the deal.”

–          February, 1962 deal fell thru – Hoffman refused to contribute a total of $34,000.
–          Overall five promises or re-assurances by Lukowitz to Hoffman.
–          By November, considered buying the Chilton lot, build the building, lease it to Hoffman, and had agreed on some terms of a ten year lease – with option to renew the lease or buy the property.
–          Defendant’s argument

  • Agreement was never reached on essential factors necessary to establish a contract between the two parties.
    • Size, cost design, layout of the store
    • Rent, maintenance, renewal and purchase options
    • Promissory estoppel should be able to create a contract from the promise that conferred between the two parties.

Procedural History
–          Jury gave special verdict of around $20,000 total.

  • $16,735 for Sale of Wautoma store, sale of bakery, $1,000 for taking up option, moving and house expenses as well

–          Trial court confirmed the verdict but not the amount of the store for $16,735.
–          Whether the promise was necessary to sustain a cause of action for promissory estoppel must embrace all essential details of a proposed transaction between the promisor and promise so as to be the equivalent of an offer that would result in a binding contract between the parties if the promise were to accept the same.
–          Does a contract, with regards to primary estoppel need to have every element agreed upon in order for someone (Hoffman) to rely on a deal in which they were treated unjustly?
–          Yes
–          Original rule was: the acts of reliance by the promise to his detriment provided a substitute for consideration – this would not support Hoffman’s assertion here…
–          Does not impose the requirement that the promise giving rise to the cause of action must be so comprehensive in scope as to meet the requirements of an offer that would ripen into a contract if accepted by the promise.

  • Was the promise one of which promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise?
  • Did the promise induce such action or forbearance?
  • Can injustice be avoided only by enforcement of the promise?

–          It is a mistake to regard an action grounded on promissory estoppel as the equivalent of a breach of contract action.
–          R:33, the terms of the contract are reasonably certain, even though not detailed.

  • Existence of a breach and for giving an appropriate remedy.

–          Can injustice be avoided

  • Jury cannot decide this, it must be a judge, or policy decision

–          ***Injustice would result here if plaintiffs were not granted some relief because of the failure of the defendant’s to keep their promises which inducted plaintiffs to act to their detriment.***
–          Damages should only be rewarded within primary estoppel to prevent injustices and not give “extra” money to the plaintiff…

  • Justice does not require that damages awarded him should exceed any actual loss sustained measured by the difference between the sales price and the fair market value.

–          Affirmed lower courts decision

  • Sending dollar amount back down to lower court for it to be decided.

–          Court states that, difference between sales price received and fair market value of assets sold.
–          No direct evidence on this.
–          Not a breach of contract action.

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